The typology of agency models of corruption and the totalitarian corruption case

The paper applies a typology of agency models of corruption, based on the conformity of principal and agent’s preferences to the “ideal” preferences of society. The proposed approach has allowed to theoretically substantiate the existence of new models of corrupt behavior, quasi- and totalitarian corruption, and subsequently to reveal cases of such agents’ behavior in the public procurement practice. In conditions of inefficient regulation, developed by the mala fide principal, bona fide agents in an effort to best meet the needs of society may violate certain provisions of regulatory legal acts or regulatory policy principles (quasi-corruption) whilst the mala fide agents do the same things for bribes (efficient corruption). On the other hand, in some cases the agents have to act in accordance with the inefficient regulation, being deprived of the possibility to violate it (totalitarian corruption). In the paper, the discussion of assumptions of different models, presented in the typology, including quasi- and totalitarian corruption, has been found in the academic literature. The paper examines the hypothesis that the proposition of Russian single-source procurement regulation which directly restricts annual small purchasing of contracting authorities provokes totalitarian corrupt behavior of buyers making them use electronic reverse auctions instead of single-source procurement to award small contracts.

1. Avdasheva S. B. (ed.) (2020). Regulated procurement in Russia: How to increase the stimulating role of budget expenditures and regulated companies. Moscow: HSE Publ. (In Russian).

2. Balaeva O. N., Yakovlev A. A., Rodionova Y. D., Esaulov D. M. (2018). Transaction costs in the public procurement in Russia: Macrolevel assessment based on microdata. Journal of Institutional Studies, Vol. 10, No. 3, pp. 58—84. (In Russian). https://doi.org/10.17835/2076-6297.2018.10.3.058-084

3. Berezinets I. V., Ivanov A. E. (2017). On the policy of regulating electronic auction and the practice of regulating the tender procedure. Goszakaz: Management, Placement, Support, No. 50, pp. 36—45. (In Russian).

4. Ivanov A. (2016). Organization and system (On the book “Empirical analysis of public procurement system in Russia”). Voprosy Ekonomiki, No. 2, pp. 150—158. (In Russian). https://doi.org/10.32609/0042-8736-2016-2-150-158

5. Acemoglu D., Verdier T. (2000). The choice between market failures and corruption. American Economic Review, Vol. 90, No. 1, рр. 194—211. https://doi.org/10.1257/aer.90.1.194

6. Aidt T. (2003). Economic аnalysis of corruption: А survey. Economic Journal, Vol. 113, No. 491, рр. F632—F652. https://doi.org/10.1046/j.0013-0133.2003.00171.x

7. Berezinets I., Ivanov A. (2019). Well-known scoring rules under conditions of low competition in tenders. International Journal of Procurement Management, Vol. 12, No. 6, рр. 711—731. https://doi.org/10.1504/IJPM.2019.102957

8. Cavalieri M., Guccio C., Rizzo I. (2018). Does corruption and the institutional characteristics of the contracting authorities affect the execution of healthcare infrastructures? An empirical investigation for Italy. Journal of Public Procurement, Vol. 18, No. 2, pp. 148—164. https://doi.org/10.1108/JOPP-06-2018-010

9. Essien E., Lodorfos G., Kostopoulos I. (2019). Antecedents of supplier selection decisions in the public sector in Nigeria. Journal of Public Procurement, Vol. 19, No. 1, pp. 15—45. https://doi.org/10.1108/JOPP-03-2019-023

10. Grossman G., Helpman E. (1994). Protection for sale. American Economic Review, Vol. 84, No. 4, pp. 833—850.

11. Gruening G. (2001). Origin and theoretical basis of new public management. International Public Management Journal, Vol. 4, No. 1, рр. 1—25. https://doi.org/10.1016/S1096-7494(01)00041-1

12. Guarnieri P., Gomes R. (2019). Can public procurement be strategic? A future agenda proposition. Journal of Public Procurement, Vol. 19, No. 4, pp. 295—321. https://doi.org/10.1108/JOPP-09-2018-0032

13. Huntington S. (1973 [1968]). Political order in changing societies. 7th printing. London: Yale University Press.

14. Ivanov A. (2016). Quasi-corruption in public procurement: Тhe case of Russian Federation. In: A. A. C. Teixeira, C. Pimenta, A. Maia, J. A. Moreira (eds.). Corruption, economic growth and globalization. London: Routledge, рр. 112—130.

15. Jain A. (2001). Corruption: А review. Journal of Economic Surveys, Vol. 15, No. 1, рр. 71—121. https://doi.org/10.1111/1467-6419.00133

16. Jain A. (2011). Corruption: Theory, evidence and policy. Journal for Institutional Comparisons, Vol. 9, No. 2, рр. 3—9.

17. Leff N. (1964). Economic development through bureaucratic corruption. American Behavioral Scientist, Vol. 8, No. 3, рр. 8—14. https://doi.org/10.1177/000276426400800303

18. Marcarelli G., Nappi A. (2019). Multicriteria approach to select the most economically advantageous tender: The application of AHP in Italian public procurement. Journal of Public Procurement, Vol. 19, No. 3, pp. 201—223. https://doi.org/10.1108/JOPP-05-2018-0020

19. Moszoro M., Spiller P. (2012). Third-party opportunism and the nature of public contracts. NBER Working Paper, No. 18636. https://doi.org/10.3386/w18636

20. Nye J. S. (1967). Corruption and political development: A cost-benefit analysis. American Political Science Review, Vol. 61, No. 2, pp. 417—427. https://doi.org/10.2307/1953254

21. Plaček M., Schmidt M., Ochrana F., Vaceková G., Soukopová J. (2019). Repeated selection of supplier, factors and results: Тhe Czech Republic. Journal of Public Procurement, Vol. 19, No. 4, pp. 322—344. https://doi.org/10.1108/JOPP-12-2018-0049

22. Rose-Ackerman S. (1975). The economics of corruption. Journal of Public Economics, Vol. 4, No. 2, рр. 187—203. https://doi.org/10.1016/0047-2727(75)90017-1

23. Rose-Ackerman S. (2002). “Grand” corruption and the ethics of global business. Journal of Banking & Finance, Vol. 26, No. 9, рр. 1889—1918. https://doi.org/10.1016/S0378-4266(02)00197-8

24. Rose-Ackerman S. (2008). Corruption and government. International Peacekeeping, Vol. 15, No. 3, рр. 328—343. https://doi.org/10.1080/13533310802058802

25. Rustiarini N., Nurkholis N., Andayani W. (2019). Why people commit public procurement fraud? The fraud diamond view. Journal of Public Procurement, Vol. 19, No. 4, pp. 345—362. https://doi.org/10.1108/JOPP-02-2019-0012

26. Simon H. (1961 [1947]). Administrative behavior. 2nd ed. New York: Macmillan. Stigler G. (1961). The economics of information. Journal of Political Economy, Vol. 69, No. 3, pp. 213—225. https://doi.org/10.1086/258464

27. Tumuramye B., Ntayi J., Muhwezi M. (2018). Whistle-blowing intentions and behaviour in Ugandan public procurement. Journal of Public Procurement, Vol. 18, No. 2, pp. 111—130. https://doi.org/10.1108/JOPP-06-2018-008

28. UNCITRAL (2011). UNCITRAL model law on public procurement. In: Report of the United Nations Commission on International Trade Law. Official Records of the General Assembly, Sixty-sixth Session, Supplement No. 17 (A/66/17), annex I. New York: United Nations.

29. Williams-Elegbe S. (2018). Systemic corruption and public procurement in developing countries: Аre there any solutions? Journal of Public Procurement, Vol. 18, No. 2, pp. 131—147. https://doi.org/10.1108/JOPP-06-2018-009