Cartels and Bribes

Elisabetta Iossa, Roberto Burguet and Giancarlo Spagnolo

No 16481, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We study the relationship between collusion and corruption in a stylized model of repeated procurement where the cost of reporting corrupt bureaucrats gives rise to a free riding problem. Cooperation among honest suppliers alleviates free-riding in reporting. However, it also facilitates collusion in bidding by increasing the value of the collusive rent. In turn, bidding collusion facilitates cooperation in reporting by increasing the value of having honest bureaucrats, generating a trade-off between collusion and corruption.

Keywords: Bribes; Cartels; Corruption; Free-riding; Whistle-blowing (search for similar items in EconPapers)
JEL-codes: D44 D73 H57 L41 (search for similar items in EconPapers)
Date: 2021-08
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Working Paper: Cartels and Bribes (2021)
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