The Simple Economics of Extortion: Evidence from Trucking in Aceh
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Author(s)
Olken, Benjamin A.
Barron, Patrick
Date Issued
January 2009
Journal
Journal of Political Economy
Publisher
University of Chicago Press
Citation
Olken, Benjamin A., and Patrick Barron. “The Simple Economics of Extortion: Evidence from Trucking in Aceh.” Journal of Political Economy 117.3 (2009): 417-452. 2009 by The University of Chicago
Version
Final published version
Abstract
This paper tests whether the behavior of corrupt officials is consistent
with standard industrial organization theory. We designed a study in
which surveyors accompanied Indonesian truck drivers on 304 trips,
during which they observed over 6,000 illegal payments to police,
soldiers, and weigh station attendants. Using plausibly exogenous
changes in the number of checkpoints, we show that market structure
affects the level of illegal payments. We further show that corrupt
officials use complex pricing schemes, including third-degree price
discrimination and a menu of two-part tariffs. Our findings illustrate
the importance of considering the market structure for bribes when
designing anticorruption policy.
MIT Department
Massachusetts Institute of Technology. Department of Economics
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Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
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DOI of Published Version
https://doi.org/10.1086/599707
