Corruption as an Alternative to Limit Pricing

Raluca Elena Buia ()
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Raluca Elena Buia: Department of Economics, University Of Venice C� Foscari

No 2011_02, Working Papers from Department of Economics, University of Venice "Ca' Foscari"

Abstract: We explore to what extent bribery can be an alternative way of fighting rivals� entry on the market when there is uncertainty about the degree of corruption in the public sector. For high levels of corruption, �covert� fight through bribery is the optimal choice of an incumbent. For low degree of corruption, instead, the incumbent prefers to act strategically but overtly by playing a limit pricing game.

Keywords: Corruption; Bribery; Production licence; Moral cost; Covert/overt fight (search for similar items in EconPapers)
JEL-codes: D21 D73 H40 (search for similar items in EconPapers)
Pages: 33
Date: 2011
New Economics Papers: this item is included in nep-com and nep-ind
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