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Abstract

This paper analyzes the amakudari practice in Japan. Amakudari refers to a process in which government agencies contact the private firms that they regulate, asking them to provide employment for their retiring elite bureaucrats. Upon employment at the private firms, bureaucrats may collude with their former colleagues in the ministries they worked for to secure lucrative government contracts, avoid regulatory inspections, or obtain preferential treatment for their new employers. This paper provides an explicit formalization of the implicit collusion between the regulator and the regulated.