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| Author: | Bliss, C. Tella, R. Di |
| Title: | Does competition kill corruption? |
| Journal: | Journal of Political Economy
1997 : OCT, VOL. 105:5, p. 1001-1023 |
| Index terms: | POLITICAL ECONOMY COMPETITION CORRUPTION |
| Language: | eng |
| Abstract: | Corrupt agents (official or gangsters) exact money from firms. Corruption affects the number of firms in a free-entry equilibrium. The degree of deep competition in the economy increases with lower overhead costs relative to profits and with a tendency toward similar cost structures. Increases in competition may not lower corruption. The model explains why a rational corrupt agent may extinguish the source of his bribe income by causing a firm to exit. Assessing the welfare effect of corruption is complicated by the fact that exit caused by corruption does not necessarily reduce social welfare. |
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