The fails of the free market from the Corruption

Dr. Ali TurhaniLectures of the Economy Faculty

University “Aleksander Xhuvani’, Elbasan, Albania

What are the fails of the free market from the Corruption

The decentralization process stimulate the corruption in the different level of the management. The analysis of the fails from this process in the free market create an effective base to understand the way how the business organizations fails from the corruption. The three categories of the fails are : 1. Economy of scales 2. Undefined outputs 3. Externalities

Economy of Scales

The economy of scales create possibilities for corruptions. The high level of the Managers in the share-holders Companies make deals for their interests behind the shareholders back. The incomes of the Companies are controlled from the regulators commissions. It means that the dividend will be distributed in an unlegal way, too. This can be realized by the buying of the Inputs with higher price as they are in reality. This can be realized through the selling contracts of the outputs to the other clients.

Undefinited Outputs

For a lot of outputs are very difficult to use indicators to appreciate them. For this reason the corruption can have a lot of space to act, because there is impossible to appreciate the performance of the organization. Such Companies are the research laboratories, the training programmes, the artistic outputs etc. The selecting and recruitment process of the labor force for the company can stimulate the corruption from the people who have to decide for this.

Externalities

The private managers make compromises in production and the selling of the different information . The corruption is present as much times as a privatization process is developed by the public authorities. But the corruption can be developed in the field of the media, too. For example when media hide critic facts of the public authorities, it means that a corruption process is developed. The corruption can be present in the field of media and in the cases when journalists make pressure through the so-called compromised fact over the public officials, with aim to take money from them.