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Regulation and corporate corruption: New evidence from the telecom sector

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  • Berg, Sanford V.
  • Jiang, Liangliang
  • Lin, Chen

Abstract

This paper examines how government regulation in developing countries affects the form of corruption between business customers and service providers in the telecom sector. We match the World Bank enterprise-level data on bribes with a unique cross-country telecom regulation dataset collected by Wallsten et al. (2004), finding that (1) strong regulatory substance (the content of regulation) and regulatory governance reduce corruption; (2) competition and privatization reduces corruption; (3) the effects of regulatory substance on corruption control are stronger in countries with state-owned or partially state-owned telecoms, greater competition, and higher telecommunication fees; and (4) bureaucratic quality exert substitution effects to regulatory substance in deterring corruption. Overall, our results suggest that regulatory strategies that reduce information asymmetry and increase accountability tend to reduce illegal side-payments for connections.

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  • Berg, Sanford V. & Jiang, Liangliang & Lin, Chen, 2012. "Regulation and corporate corruption: New evidence from the telecom sector," Journal of Comparative Economics, Elsevier, vol. 40(1), pages 22-43.
    • Handle: RePEc:eee:jcecon:v:40:y:2012:i:1:p:22-43
    DOI: 10.1016/j.jce.2011.12.001
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    4. Berg, Sanford V., 2013. "Best practices in regulating State-owned and municipal water utilities," Documentos de Proyectos 4079, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
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    9. Diaby, Aboubacar & Sylwester, Kevin, 2014. "Bureaucratic competition and public corruption: Evidence from transition countries," European Journal of Political Economy, Elsevier, vol. 35(C), pages 75-87.
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    More about this item

    Keywords

    Telecommunications; Regulation; Corruption;
    All these keywords.

    JEL classification:

    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L9 - Industrial Organization - - Industry Studies: Transportation and Utilities

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