This paper develops a Walrasian general equilibrium model with division of labour, economies of specialisation, and endogenised corruption. It extends the general “consumerproducer” framework to consider the effects of institutionalised corruption on economic welfare, network size of division of labour and productivity. Examining both implicit corruption and explicit corruption indicates that the privileged groups will always achieve extra benefit and interest over other commoners and cause them hardship. The situation will become worse if the privileged groups acquire more control and influence over the economy. The model shows that in an equilibrium (fixed point), the degree of corruption, the degree of division of labour, and productivity are interdependent, and it demonstrates that the network size of division of labour and productivity will increase when the institutional efficiency of enforcement of anticorruption and property rights improve. Although the model is developed in order to explain corruption in Asia, it is also potentially relevant to other countries with entrenched privileged groups.