Does Transparency Reduce Corruption ?

Does a better monitoring (transparency) of officials lowers 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 it may raise the average bribe as it motivates the corruptor to bid more aggressively for the agent’s favour. We show that transparency affects the prevalence of corruption at the margin through a competitive effect and an efficiency effect.