A THEORY OF LIMITS ON CORRUPTION AND SOME APPLICATIONS

Starting from a simple premise, this paper has proposed a framework that is at once capable of explaining variations in levels of corruption across governments, their subunits, and over time. The simple premise is that corruption nearly always creates losers who may take countervailing actions (CA) to reduce their losses. The incentives to engage in CA depend on two sets of factors, global and specific. Global factors, such as human, political and property rights, education, income levels and income distribution, have across-the-board effects on the ability to engage in CA; variations in levels of corruption across countries and over time can be explained, among other things, in terms of these factors. Specific factors, such as the type of corruption, number of losers, and the size of their losses, may vary across government agencies within the same country and, therefore, can explain different levels of corruption across these agencies.