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Corruption as an Alternative to Limit Pricing

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  • Raluca Elena Buia

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    (Department of Economics, University Of Venice Cà Foscari)

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    Abstract

    We explore to what extent bribery can be an alternative way of fighting rivals’ entry on the market when there is uncertainty about the degree of corruption in the public sector. For high levels of corruption, “covert” fight through bribery is the optimal choice of an incumbent. For low degree of corruption, instead, the incumbent prefers to act strategically but overtly by playing a limit pricing game.

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    File URL: http://www.unive.it/media/allegato/DIP/Economia/Working_papers/Working_papers_2011/WP_DSE_buia_02_2011.pdf
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    Bibliographic Info

    Paper provided by Department of Economics, University of Venice "Ca' Foscari" in its series Working Papers with number 2011_02.

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    Length: 33
    Date of creation: 2011
    Date of revision:
    Handle: RePEc:ven:wpaper:2011_02

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    Related research

    Keywords: Corruption; Bribery; Production licence; Moral cost; Covert/overt fight;

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    1. Dixit, Avinash, 1979. "The Role of Investment in Entry-Deterrence," The Warwick Economics Research Paper Series (TWERPS) 140, University of Warwick, Department of Economics.
    2. Vito Tanzi, 1998. "Corruption Around the World," IMF Working Papers 98/63, International Monetary Fund.
    3. Vito Tanzi, 1998. "Corruption Around the World: Causes, Consequences, Scope, and Cures," IMF Staff Papers, Palgrave Macmillan, vol. 45(4), pages 559-594, December.
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