With corruption, prohibition is better at curtailing consumption than taxation. Prohibition enforcers are incentivized to enforce against illegal producers to extract bribes from them, while the latter willingly pay the bribes to keep supplying the market. In equilibrium, total quantity is...

When do resource revenues increase corruption? I develop a model of public good provision by a politician who obtains rents by stealing government revenues or extracting bribes in exchange for public goods spending. I show there is a threshold level of revenues below which the politician does...

When do citizens tolerate corrupt, but competent, politicians? This paper formally establishes conditions under which citizens trade off corruption for competence. First, the regime has to be sufficiently democratic such that a corrupt politician has to bargain with citizens in order to stay in...