Bureaucratic Monopoly and the Nature and Timing of Bribes: Evidence from Croatian Data

Abstract

This paper draws on unique insights about the nature of bribe payments to determine the factors driving composition of bribes (whether cash or non-cash) and their timing (whether prepayment or payment at the time of ‘service’). Key questions addressed are: (i) What is the effect of bureaucratic monopoly on cash bribes? and (ii) How does the monopoly power of bureaucrats influence the timing of bribes? Controlling for many ‘standard’ influences driving corruption and comparing the quality and quantity of government, results show that whereas a monopolist bureaucrat is more likely to demand bribes in cash, he/she is less likely to demand their prepayment. Further, while a larger government makes both cash bribes and prepayment more likely, greater economic prosperity makes cash bribes less likely and does not affect their timing.