Graft, bribes, and the practice of corruption

We construct a dynamic model of corruption in organizations where officials privately know their propensity for corruption and clients optimally choos e the bribe offered. We show that there is a continuum set of stationary br ibe equilibria due exclusively to the dynamic nature of the model and the e ndogenous determination of bribes. This can explain why similar countries h ave stable but different "implicit prices" for the same illegal services. W e also show that, by not considering the reaction of clients, traditional a nalysis have systematically overestimated the beneficial effect of increasi ng wages as an anticorruption measure.