The paper presents a theoretical model with bureaucratic corruption where bribe income can leak out of an economy. In such an economy given its perception about the extent of leakage the government sets the price of public services required for entrepreneurship by maximizing the welfare of the...

This paper suggests ways in which a marriage between neoclassical and institutional economics can improve our analytical understanding of economic problems as well as empirical testing and estimation relating to economic issues. Theoretical modeling which considers optimizing agents, constrained...