Individuals weigh the benefits and the costs of giving and taking bribes. These costs include moral costs, and the weighing takes place in individual consciences that are shaped by social values and cultural norms. But because economic calculations are present, corruption will respond to changes in the benefits that can be gained from the illegal transaction, which in turn depend on the way the system of supplying those benefits is structured. Corruption will also respond to the costs of the illegal transaction, which in turn depend on the risks of being discovered and prosecuted, and the penalties that result from prosecution. In short, quite apart from an analysis of morals or attitudes, we can analyze systems in terms of their vulnerability to corruption.
Competition is less vulnerable to corruption than monopoly.
Clear rules of the game are less susceptible to corruption than are systems where official discretion is paramount. Systems with accountability and ample information about results are less vulnerable than systems whose lack of transparency leads readily to clandestine decisions. This approach has practical applications, but time permits only a few examples. First, promote competition. In particular, if the private sector can competitively provide something that government is now providing monopolistically, consider privatization combined with policies to promote accountability.