Consider a corrupt provincial government in which each housing inspector examines two newly built structures each week. All the builders in the province are unethical and want to increase their profits by using substandard construction materials, but they can't do that unless they can bribe a housing inspector into approving a substandard construction materials, but they can't do that unless they can bride a housing inspector into approving a substandard building.
a) If bribes cost $1,000 each, how much will a housing inspector make each year in bribes?
b) There is a provincial construction supervisor who gets to hire all of the housing inspectors.
c) Corrupt officials may have an incentive to reduce the provision of government services to help line their own pockets.
d) What if reducing the number of inspectors from 20 to 10 only increased the equilibrium bribe from $1,000 to $1,500?
Consider a corrupt provincial government in which each housing inspector examines two newly built structures each week. All the builders in the province are unethical and want to increase their profits by using substandard construction materials, but they can't do that unless they can bribe a housing inspector into approving a substandard construction materials, but they can't do that unless they can bride a housing inspector into approving a substandard building.
a) If bribes cost $1,000 each, how much will a housing inspector make each year in bribes?
b) There is a provincial construction supervisor who gets to hire all of the housing inspectors.
c) Corrupt officials may have an incentive to reduce the provision of government services to help line their own pockets.
d) What if reducing the number of inspectors from 20 to 10 only increased the equilibrium bribe from $1,000 to $1,500?
