ECON 313 Lecture Notes - Lecture 29: Triangular Trade, Free Rider Problem, Nepotism
15 Feb 2017
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Document Summary
Community members benefit from projects so they have more incentives to monitor than disinterested government members. But there is the free rider problem, capture by elites. Road building in indonesia: build roads in 608 indonesian villages, the equivalent of village budget given to a local implementation team to build a road, 24% of materials missing, 2 experiments: Top down: announcement of audit of financial records by independent expert. Invitations sent to community members to attend community meeting: results: Missing materials decreased from 24% to 16% And corruption took place in other forms: in audit villages there was more nepotism, those in power favoring relative and friends by giving them jobs. A small effect if invitations sent through schools rather than by village officials (=pack the meetings with supporters) Bottom up can be captured by elites. Conclusion on corruption: an example of extractive institutions, causes:
