Redesigning the market for bribes (by making some bribes legal to give)

The Wall Street Journal reports that Kaushik Basu, currently on leave from Cornell as Chief Economic Advisor to the Government of India, has been thinking about how to reduce the incidence of bribe taking in India by officials who require bribes to deliver (legal) services that they are supposed to provide as part of their government duties. His idea is to make it legal to give a bribe in such a case, while keeping it illegal to demand or receive one, so that after the fact the bribe givers could report/testify against corrupt officials without being treated as their partners in crime.

Here's the WSJ story: Kaushik Basu Says Make Bribe Giving Legal, and here's the working paper from the Indian Ministry of Finance: Why, for a Class of Bribes, the Act of Giving a Bribe should be Treated as Legal

HT: Tabarrok at MR