The determinants of the contract of corruption

This paper seeks to identify, both theoretically and empirically, the factors which may have a different effect on two opposite shapes of bribery agreement. We assume an active regime of bribery when the bargaining power is in the hands of the bureaucrat and, vice versa, we assume a passive shape of bribery when the bargaining power is in the hands of the private counterpart of the corruption agreement. Using a panel of the Italian regions for the period 1991-2000, we find that almost all of the components of government expenditure that we consider, e.g. current and capital expenditure in education, lead to an increase solely in active bribery. Contrariwise, an increase in public regional debt, by reducing the bargaining power of the bureaucrat, exerts a negative effect on active corruption.