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Quid pro quo

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  • Zhiyong Yao
  • Yao Huang

Abstract

This paper attempts to shed some new light on two puzzles about Chinese economy: Rapid economic growth despite pandemic corruption; dramatic development of the private sector despite ‘ownership discrimination' in financial resource allocation. In our model, the productive bribe facilitates the more efficient private firm to obtain the scarce financial resource, either from the bank or from the state‐owned enterprise, and corrects the initial allocation distortion. Meanwhile, our model also generates the distortionary and the predatory bribes which hurt the economy.

Suggested Citation

  • Zhiyong Yao & Yao Huang, 2023. "Quid pro quo," Review of Development Economics, Wiley Blackwell, vol. 27(1), pages 29-61, February.
    • Handle: RePEc:bla:rdevec:v:27:y:2023:i:1:p:29-61
    DOI: 10.1111/rode.12945
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    References listed on IDEAS

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