Advanced Search
MyIDEAS: Login to save this article or follow this journal

Corruption and product market competition: An empirical investigation

Contents:

Author Info

  • Alexeev, Michael
  • Song, Yunah

Abstract

We analyze the relationship between product market competition and corruption. The existing literature typically views corruption as extortion of “pre-existing” rents. This perspective suggests that competition usually reduces corruption, although generally the sign of this relationship is ambiguous. Shleifer and Vishny (1993), however, show that cost-reducing corruption is promoted by product market competition. That is, the effect of competition on corruption depends of the nature of corruption. Unlike the existing empirical studies that employ cross-country data and general measures of corruption, we test the competition–corruption relationship using firm-level information. Our approach overcomes significant estimation difficulties that result from relying on cross-country data; for instance, we include country fixed effects, and we deal with potential endogeneities by instrumenting competition with US capital–labor ratios for the appropriate industries. Contrary to the existing empirical work, we show that stronger product market competition is associated mostly with greater corruption of the cost-reducing variety.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.sciencedirect.com/science/article/pii/S0304387813000230
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Elsevier in its journal Journal of Development Economics.

Volume (Year): 103 (2013)
Issue (Month): C ()
Pages: 154-166

as in new window
Handle: RePEc:eee:deveco:v:103:y:2013:i:c:p:154-166

Contact details of provider:
Web page: http://www.elsevier.com/locate/devec

Related research

Keywords: Competition; Corruption;

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Emerson, Patrick M., 2006. "Corruption, competition and democracy," Journal of Development Economics, Elsevier, vol. 81(1), pages 193-212, October.
  2. Jensen, Nathan M. & Li, Quan & Rahman, Aminur, 2007. "Heard melodies are sweet, but those unheard are sweeter : understanding corruption using cross-national firm-level surveys," Policy Research Working Paper Series 4413, The World Bank.
  3. Cameron, A. Colin & Gelbach, Jonah B. & Miller, Douglas L., 2011. "Robust Inference With Multiway Clustering," Journal of Business & Economic Statistics, American Statistical Association, vol. 29(2), pages 238-249.
  4. Sequeira, Sandra & Djankov, Simeon, 2010. "An Empirical Study of Corruption in Ports," MPRA Paper 21791, University Library of Munich, Germany.
  5. Campos, Nauro F & Estrin, Saul & Proto, Eugenio, 2010. "Corruption as a Barrier to Entry: Theory and Evidence," IZA Discussion Papers 5243, Institute for the Study of Labor (IZA).
  6. Indranil Dutta & Ajit Mishra, 2004. "Corruption and Competition in the Presence of Inequality and Market Imperfections," Working papers 123, Centre for Development Economics, Delhi School of Economics.
  7. Rafael Di Tella & Alberto Ades, 1999. "Rents, Competition, and Corruption," American Economic Review, American Economic Association, vol. 89(4), pages 982-993, September.
  8. Toke S. Aidt & Jayasri Dutta, 2008. "Policy Compromises: Corruption And Regulation In A Democracy," Economics and Politics, Wiley Blackwell, vol. 20(3), pages 335-360, November.
  9. Bliss, Christopher & Di Tella, Rafael, 1997. "Does Competition Kill Corruption?," Journal of Political Economy, University of Chicago Press, vol. 105(5), pages 1001-23, October.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Marjit, Sugata & Mukherjee, Vivekananda, 2014. "Rent-Seeking and Reform: Relationship Revisited," MPRA Paper 56443, University Library of Munich, Germany.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:eee:deveco:v:103:y:2013:i:c:p:154-166. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.