Chinese president Xi Jinping’s anti-corruption campaign raises important questions about the way authoritarian governments address the tradeoff between the immediate material benefits of corruption and corruption’s long-term threats to the survival of the regime. We develop a formal Nash bargaining model in which different factions of a ruling authoritarian coalition have different temporal discount rates and therefore make different tradeoffs between corruption and survival. We show how the Nash bargaining solution is affected by changes in the regime’s economic environment: the worse the economy, the lower the level of optimal corruption. Moreover, we show that sufficient economic changes can cause the bargain to dissolve, leading to purges.
Our current research investigates the implications of this model for the specific case of China. In that research, we investigate whether post-1978 economic changes lead to hypothesized adjustments in the corruption policy. We also examine whether the dramatic change in corruption policy under Xi Jinping was politically neutral, constituting a broad-based attempt to bring greater discipline to the Party, or whether there is an empirical basis for inferring that political alliances, measured in terms of past overlapping political assignments, play a role in selecting corruption.
Having developed the mechanism by which anticorruption policies are adjusted, we wish to generalize our bargaining model and extend it empirically to cover additional authoritarian governments that vary over degree of corruption, economic growth, and regime capacity to implement a corruption policy.
