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Government distributing rationed goods through a public distribution system often do not reach the deserving citizens primarily due to the practice of corruption. This paper aims to design an incentive mechanism to curtail such corrupt practices.Design/methodology/approachThe incentive mechanism is developed in a principal-agent framework where the information asymmetry is in the form of moral hazard.FindingsThe mechanism designed through this study sufficiently penalizes the agent who receives bribe and incentivizes if desired level of effort is applied.Originality/valueThe paper contributes to the existing literature by developing an incentive mechanism to prevent bureaucratic corruption. Appropriate wages are also quantified in this study.
Journal of Modelling in Management – Emerald Publishing
Published: Jul 20, 2021
Keywords: Public distribution system; Incentive mechanism; Information asymmetry; Moral hazard; Principal-agent model; Social sustainability
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