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Who must pay bribes and how much? Evidence from a cross-section of firms

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  • Svensson, Jakob

Abstract

The author exploits a unique data set on corruption containing information about estimated bribe payments by Ugandan firms. To guide the empirical analysis, he develops a simple rent-extortion model, which yields predictions on both the incidence of bribery, and the amount paid. Both predictions are consistent with the data. Firms typically have to pay bribes when dealing with public officials whose actions directly affect the firms'business operations. And the amount paid in bribes is not a fixed sum for a set of public services, but depends on the firm's ability to pay. Controlling for other potential explanations of the relationship between"ability to pay"and equilibrium graft, the author shows that the more a firm can pay, the more it has to pay.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2486.

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Date of creation: 30 Nov 2000
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Handle: RePEc:wbk:wbrwps:2486

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Related research

Keywords: Economic Theory&Research; Corruption&Anitcorruption Law; Public Sector Corruption&Anticorruption Measures; Environmental Economics&Policies; Social Policy;

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  1. Paul Collier & Jan Willem Gunning, 1999. "Why Has Africa Grown Slowly?," Journal of Economic Perspectives, American Economic Association, vol. 13(3), pages 3-22, Summer.
  2. Shang-Jin Wei, 1997. "How Taxing is Corruption on International Investors?," William Davidson Institute Working Papers Series 63, William Davidson Institute at the University of Michigan.
  3. Pranab Bardhan, 1997. "Corruption and Development: A Review of Issues," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1320-1346, September.
  4. Johnson, Simon & Kaufmann, Daniel & McMillan, John & Woodruff, Christopher, 2000. "Why do firms hide? Bribes and unofficial activity after communism," Journal of Public Economics, Elsevier, vol. 76(3), pages 495-520, June.
  5. 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.
  6. Ades, Alberto & Di Tella, Rafael, 1997. "National Champions and Corruption: Some Unpleasant Interventionist Arithmetic," Economic Journal, Royal Economic Society, vol. 107(443), pages 1023-42, July.
  7. Griliches, Zvi, 1986. "Economic data issues," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 3, chapter 25, pages 1465-1514 Elsevier.
  8. Reinikka, Ritva & Svensson, Jakob, 1999. "Confronting competition - investment response and constraints in Uganda," Policy Research Working Paper Series 2242, The World Bank.
  9. Tollison, Robert D, 1982. "Rent Seeking: A Survey," Kyklos, Wiley Blackwell, vol. 35(4), pages 575-602.
  10. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August.
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