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Beaten by bribery: Why not blow the whistle?

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  • Tina Søreide

Abstract

A recent business survey in Norway reveals that firms rarely react to corruption, even when they have lost important contracts as a result. This disinclination to take action is explored in the light of market structures, business efficiency, judicial institutions and political corruption. The paper develops a theory about how these four variables deter firms from reacting against corruption, and, in particular, how the potential for collusion reinforces the incentives to remain silent. Considered separately, each of the factors are unable to explain the low frequency of anti-corruption reactions between firms. Considered in combination, however, the various impediments suggest a more complete explanation: When conditions in market structure suggest that the best response would be to take action, political conditions may favour inaction. When a potential whistle-blower expects support from local politicians or legal institutions, the given offender may be impervious to sanctions; its role in the market will not be altered by the given case. The sum of precondition for action suggests that firms rarely react against corruption. JEL L10, K42

Suggested Citation

  • Tina Søreide, 2006. "Beaten by bribery: Why not blow the whistle?," CMI Working Papers WP 2006: 5, CMI (Chr. Michelsen Institute), Bergen, Norway.
  • Handle: RePEc:chm:wpaper:wp2006-5
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    References listed on IDEAS

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    Cited by:

    1. Villena, Mauricio G. & Villena, Marcelo J., 2010. "On the economics of whistle-blowing behavior: the role of incentives," MPRA Paper 35917, University Library of Munich, Germany, revised 24 Mar 2010.
    2. Frédéric Boehm & Johann Graf Lambsdorff, 2009. "Corrupción y anticorrupción: una perspectiva neo-institucional," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 11(21), pages 45-72, July-Dece.

    More about this item

    Keywords

    Corruption Whistleblowing Industrial organization Collusion JEL L10; K42;

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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