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Corruption and competition for resources

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  • Kjetil Bjorvatn
  • Tina Søreide

Abstract

An increasing share of world FDI is carried out by multinationals from developing countries. These investors may have objectives and constraints that differ from their developed country counterparts. In this paper we focus on differences in attitudes to corruption, and how these may shape the competition for the right to extract resources in a developing country context. We show how differences in the investors’ level of technology and differences in the host country government’s trade-off between bribes and taxes determine who wins the competition for the resource and the winning price. One finding is that competition from a bribe-willing investor may induce a bribe-averse investor to enter into corruption. Surprisingly, however, we also find that competition with a bribe-willing investor may induce the bribe-averse investor to increase its tax payments. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Kjetil Bjorvatn & Tina Søreide, 2014. "Corruption and competition for resources," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 21(6), pages 997-1011, December.
    • Handle: RePEc:kap:itaxpf:v:21:y:2014:i:6:p:997-1011
    DOI: 10.1007/s10797-013-9292-x
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    Cited by:

    1. Tima T. Moldogaziev & Cheol Liu & Martin J. Luby, 2017. "Public Corruption in the U.S. States and Its Impact on Public Debt Pricing," Kyklos, Wiley Blackwell, vol. 70(2), pages 306-329, May.
    2. Bürgi Bonanomi, Elisabeth & Elsig, Manfred & Espa, Ilaria, 2015. "The Commodity Sector and Related Governance Challenges from a Sustainable Development Perspective: The Example of Switzerland Current Research Gaps," Papers 865, World Trade Institute.

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    More about this item

    Keywords

    Corruption; FDI; Auction; Natural resources; K2; K4; O1;
    All these keywords.

    JEL classification:

    • K20 - Law and Economics - - Regulation and Business Law - - - General
    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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