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FCPA and Market Quality in Emerging Economies

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  • Krishnendu Ghosh DASTIDAR
  • Makoto YANO

Abstract

In this paper we tried to explore the overall effects of FCPA in a corruption ridden emerging economy, where only the US firm is subject to FCPA regulations. We demonstrate the following. (i) While an increase in fines under FCPA reduces overall corruption, it leads to a deterioration in the market quality in an emerging economy. (ii) If the products are substitutes (complements), overall corruption increases (decreases) and market quality in the emerging economy improves (deteriorates) with stricter enforcement of FCPA. (iii) An increase in the US firm's technological advantage unambiguously leads to a decrease in the market quality.

Suggested Citation

  • Krishnendu Ghosh DASTIDAR & Makoto YANO, 2020. "FCPA and Market Quality in Emerging Economies," Discussion papers 20087, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:20087
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    File URL: https://www.rieti.go.jp/jp/publications/dp/20e087.pdf
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    References listed on IDEAS

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    1. Krishnendu Ghosh Dastidar, 2017. "Oligopoly, Auctions and Market Quality," Economics, Law, and Institutions in Asia Pacific, Springer, number 978-4-431-55396-0, December.
    2. Makoto Yano, 2009. "The Foundation Of Market Quality Economics," The Japanese Economic Review, Japanese Economic Association, vol. 60(1), pages 1-32, March.
    3. Krishnendu Ghosh Dastidar & Makoto Yano, 2021. "Corruption, market quality, and entry deterrence in emerging economies," International Journal of Economic Theory, The International Society for Economic Theory, vol. 17(1), pages 101-117, March.
    4. Makoto Yano, 2008. "Competitive fairness and the concept of a fair price under Delaware law on M&A," International Journal of Economic Theory, The International Society for Economic Theory, vol. 4(2), pages 175-190, June.
    5. Krishnendu Ghosh Dastidar & Fumio Dei, 2014. "Introduction to the Special Issue of Pacific Economic Review on Market Quality Economics," Pacific Economic Review, Wiley Blackwell, vol. 19(5), pages 531-536, December.
    6. Avinash Dixit, 1979. "A Model of Duopoly Suggesting a Theory of Entry Barriers," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 20-32, Spring.
    7. Alipranti, Maria & Milliou, Chrysovalantou & Petrakis, Emmanuel, 2014. "Price vs. quantity competition in a vertically related market," Economics Letters, Elsevier, vol. 124(1), pages 122-126.
    8. Krishnendu Ghosh Dastidar, 2017. "Introduction," Economics, Law, and Institutions in Asia Pacific, in: Oligopoly, Auctions and Market Quality, chapter 0, pages 1-27, Springer.
    9. Maria Arbatskaya & Hugo M Mialon, 2020. "The Impact of the Foreign Corrupt Practices Act on Competitiveness, Bribery, and Investment," American Law and Economics Review, American Law and Economics Association, vol. 22(1), pages 105-126.
    10. Krishnendu Ghosh Dastidar, 2015. "Nature of Competition and New Technology Adoption," Pacific Economic Review, Wiley Blackwell, vol. 20(5), pages 696-732, December.
    11. Hackner, Jonas, 2000. "A Note on Price and Quantity Competition in Differentiated Oligopolies," Journal of Economic Theory, Elsevier, vol. 93(2), pages 233-239, August.
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    Cited by:

    1. Dastidar, Krishnendu Ghosh & Jain, Sonakshi, 2023. "Favouritism and corruption in procurement auctions," Mathematical Social Sciences, Elsevier, vol. 123(C), pages 10-24.

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