Andrianova, Svetlana; Melissas, Nicolas - Centro de Investigación Económica (CIE), Departamento … - 2006
We consider a set-up in which a principal must decide whether or not to legalise a socially undesirable activity. The law is enforced by a monitor who may be bribed to conceal evidence of the offence and who may also engage in extortionary practices. The principal only declares the activity...