Does transparency reduce political corruption?

Abstract

Does a better monitoring of officials' actions (transparency) lower the incidence of corruption? Using a common agency game with imperfect information, we show that the answer depends on the measure of corruption that one uses. More transparency lowers the prevalence of corruption but raises the average bribe as it motivates the corruptor to bid more aggressively for the agent's favor. We show that transparency affects the prevalence of corruption at the margin through a competitive effect and an efficiency effect.