| Stage 2.1: | The firm chooses its level of resource conversion and the privately purchased semi-fixed input. |
| Stage 2.2: | The presiding official chooses the optimal provision of sub-sidized inputs through maximization of a weighted average of personal utility and social welfare. The provision of g is a schedule of the firm’s bribe, S, such that the appropriate subsidy is offered upon observation of S. |
| Stage 2.3: | The firm chooses the variable input, y, to maximize profit, given the outcomes of previous stages. |
| The firm chooses its level of resource conversion and the privately purchased semi-fixed input. | |
| The presiding official chooses the optimal provision of sub-sidized inputs through maximization of a weighted average of personal utility and social welfare. The provision of g is a schedule of the firm’s bribe, S, such that the appropriate subsidy is offered upon observation of S. | |
| The firm chooses the variable input, y, to maximize profit, given the outcomes of previous stages. |
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