Corruption and health care provision: An extension of the Shleifer and Vishny’ Model

Abstract

Abstract. The problem that arises is how the State official in a monopoly situation maximizes the value of bribes collected, by selling public services to users? To answer this question, we show first that in the case of health care provision, the Shleifer and Vishny’ simple monopoly model which highlights two forms of corruption (with theft and without theft) is limited insofar as it underestimates not only the value of bribes likely to be collected, but also the loss of income that corrupt practices cause to public services. Our model rather reveals that the State agent in a monopoly situation can discriminate users according to their characteristics in order to collect more possible bribes. Indeed, our model shows that when a medical doctor maximizes its earnings and whatever the form of corruption practiced, he plays not only on amounts of bribes paid and a part of the official price, but also on users’ characteristics. However, for some amounts the State agent will tend to practice the form of corruption without theft on certain users’ characteristics where he/she would draw the greatest possible gain.

Keywords. Corruption with and without theft, Discrimination at first degree, Lerner`s index, Profit-sharing scheme, Health system.

JEL. D40, I10, I14, I15.