Petty corruption and citizen reports

When offering incentive schemes to low-ranking officials, a tension exists between the dual goals of enforcing regulations and preventing corruption. Recent efforts to curb abuses have inspired government interest in using new communication technologies to collect information directly from citizens. We propose a model where a corruptible official is tasked with recommending the government to grant or deny the permit an entrepreneur needs to undertake production. The government tolerates corruption when it does not communicate directly with the entrepreneur. A simple scheme whereby the entrepreneur can report her own noncompliance to the government deters corruption and improves regulatory enforcement.