Journal of Political Economy Vol. 105 No. 5 1997
Does Competition Kill Corruption?
Abstract
Corrupt agents (officials 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.
- DOI
- 10.1086/262102
- Volume
- 105
- Issue
- 5
- Pages
- 1001-1023
- Language
- en
- Sources
- openalex crossref bibtex:phds-export.bib