Dispatchers
Abstract: It is a well-established fact that the government bureaucracy in many developing countries is large, difficult to understand, little transparent and slow-moving. However, "de jure" bureaucratic procedures sometimes have little to do with how firms or individuals actually go about when dealing with the government bureaucracy. One institution that has emerged in many countries is a specialized intermediary, henceforth called dispatcher, that helps individuals and firms in bureaucratic contacts. It is often the workings of this "de facto" institution, rather than the de jure procedure, that determines outcomes such as how many firms or individuals that go through a certain bureaucratic procedure, processing times, waiting times and financial costs. In this paper, a model in which firms demand a license from the government bureaucracy is developed in order to address two key questions related to the use of dispatchers. First, how does the existence of dispatchers change the number of licenses awarded and prices that firms pay for licenses? How do these results depend on the organization of bureaucrats and dispatchers, on the regulatory framework and on the extent of corruption in the bureaucracy? Second, what are the incentives of corrupt bureaucrats and dispatchers to try to make regulation more/less complicated? When are the incentives of bureaucrats and dispatchers to create "red tape" aligned? Ultimately and ideally, the answers to these questions can help in explaining why bureaucracies have proven so hard to reform.
