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Corruption and market reform

Tina Søreide () and Kjetil Bjorvatn

No WP 2003:7, CMI Working Papers from CMI (Chr. Michelsen Institute), Bergen, Norway

Abstract: Market reforms in developing and transition economies have sometimes failed to deliver the desired welfare effects. Corruption may be an important reason for the ineffciency of market reforms, such as privatization campaigns. The present paper demonstrates how corruption can affect the choice of buyer of a public asset. Our main result is that market reform in highly corrupt societies is likely to result in less competition and less economic effciency than reform in less corrupt societies. We also demonstrate that the level of bribes in the sale of public assets does not necessarily increase in the government's emphasis on bribes.

Keywords: Corruption; market reform; privatization (search for similar items in EconPapers)
JEL-codes: F23 L12 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2003
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