Abstract

The article aims at singling out the main analytical and policy implications from the application of transaction costs theory to the study of illegal markets, with a focus on the market for corruption. The purpose is to shade light on governance structures which can contribute to the emergence of informal institutions in the interactions between corruptors and corruptees. After reviewing the enforcement mechanisms which can reduce ex-post transaction costs, variables are discussed determining their relative effectiveness in the potential equilibria of market for corruption. After a survey of the role of some actors as providers of protection, a discussion is presented of the implication of previous analysis on policy tools, with a brief comparison with the measures introduced after the approval of law 190/2012.