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Economic Inquiry - 2022 - Varvarigos - On the relation between corruption and market competition.pdf (1.11 MB)

On the Relation Between Corruption and Market Competition

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Version 2 2023-11-16, 16:19
Version 1 2022-07-12, 08:46
journal contribution
posted on 2023-11-16, 16:19 authored by Dimitrios Varvarigos, Eleni Stathopoulou

We construct a model where bureaucrats are corruptible, in the sense that they may accept bribes in order to mislead the authorities on the actual circumstances of firms that do not comply with a government regulation. We show that corruption increases the number of competing firms. We also show that increased competition (i) increases the likelihood that corruptible bureaucrats will actually transgress, and (ii) increases the bribe that corrupt bureaucrats will demand from each firm. These results are consistent with existing evidence showing a positive relation between competition and corruption, and that this causal relation operates in both directions.

History

Author affiliation

School of Business, University of Leicester

Version

  • VoR (Version of Record)

Published in

Economic Inquiry

Volume

61

Issue

1

Pagination

99-121

Publisher

Wiley

issn

0095-2583

Acceptance date

2022-07-06

Copyright date

2022

Available date

2023-11-16

Language

en

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