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Bargaining for Bribes: The Role of Institutions

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  • Fisman, Raymond
  • Gatti, Roberta

Abstract

We develop a simple bargaining framework of corruption where firms pay bribes to avoid regulation. Consistent with this setup, we find that time spent bargaining with bureaucrats and amount of bribe payments are positively correlated, but that this association is weaker (and, thus, corruption more 'efficient') when the terms of unofficial contracts are known to the firms. We also show that institutional arrangements that result in lower uncertainty in bargaining for bribes attenuate the impact of corruption on firm growth.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5712.

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Date of creation: Jun 2006
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Handle: RePEc:cpr:ceprdp:5712

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References

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  1. Simeon Djankov & Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer & Juan Botero, 2003. "The Regulation of Labor," NBER Working Papers 9756, National Bureau of Economic Research, Inc.
  2. Jakob Svensson, 2003. "Who Must Pay Bribes And How Much? Evidence From A Cross Section Of Firms," The Quarterly Journal of Economics, MIT Press, vol. 118(1), pages 207-230, February.
  3. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 1999. "The Quality of Government," Journal of Law, Economics and Organization, Oxford University Press, vol. 15(1), pages 222-79, April.
  4. Daniel Kaufmann & Shang-Jin Wei, 1999. "Does "Grease Money" Speed Up the Wheels of Commerce?," NBER Working Papers 7093, National Bureau of Economic Research, Inc.
  5. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August.
  6. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output Per Worker Than Others?," The Quarterly Journal of Economics, MIT Press, vol. 114(1), pages 83-116, February.
  7. Ausubel, Lawrence M & Deneckere, Raymond J, 1993. "Efficient Sequential Bargaining," Review of Economic Studies, Wiley Blackwell, vol. 60(2), pages 435-61, April.
  8. Keefer, Philip, 2001. "When do special interests run rampant ? disentangling the role in banking crises of elections, incomplete information, and checks and balances," Policy Research Working Paper Series 2543, The World Bank.
  9. Cadot, Olivier, 1987. "Corruption as a gamble," Journal of Public Economics, Elsevier, vol. 33(2), pages 223-244, July.
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Citations

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Cited by:
  1. Jensen, Nathan M & Rahman, Aminur, 2011. "The silence of corruption : identifying underreporting of business corruption through randomized response techniques," Policy Research Working Paper Series 5696, The World Bank.
  2. Keith Blackburn & Gonzalo F. Forgues-Puccio, 2007. "Why is Corruption Less Harmful in Some Countries Than in Others?," Centre for Growth and Business Cycle Research Discussion Paper Series 88, Economics, The Univeristy of Manchester.
  3. Vial, Virginie & Hanoteau, Julien, 2010. "Corruption, Manufacturing Plant Growth, and the Asian Paradox: Indonesian Evidence," World Development, Elsevier, vol. 38(5), pages 693-705, May.
  4. 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.
  5. Roberta Gatti & Matteo Morgandi & Rebekka Grun & Stefanie Brodmann & Diego Angel-Urdinola & Juan Manuel Moreno & Daniela Marotta & Marc Schiffbauer & Elizabeth Mata Lorenzo, 2013. "Jobs for Shared Prosperity : Time for Action in the Middle East and North Africa," World Bank Publications, The World Bank, number 13284, October.
  6. Hallward-Driemeier, Mary & Pritchett, Lant, 2011. "How business is done and the'doing business'indicators : the investment climate when firms have climate control," Policy Research Working Paper Series 5563, The World Bank.

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