The Industrial Organization of Corruption: Monopoly, Competition and Collusion
Dmitry Ryvkin () and
Danila Serra ()
No wp2016_10_01, Working Papers from Department of Economics, Florida State University
We study how the introduction of competition between public officials for the provision of a given license affects extortionary corruption, i.e., the demands of harassment bribes. We conduct a laboratory experiment where citizens need to obtain licenses from public officials, and officials can demand a bribe on top of the license official fee. We first provide officials with monopoly power by giving citizens no choice but to pay the bribe to their assigned official. We then introduce competition among officials by allowing citizens to engage in costly search and get the license from any of the available offices. We examine transactions that are likely to be one-shot, such as the delivery of a drivers' license, and transactions that require frequent interactions between the parties and therefore allow for reputation building, such as yearly renewals of building permits. Finally, we examine officials' ability to collude by communicating before setting their bribe demands. We find that introducing competition significantly reduces corruption both in settings characterized by one-shot and by repeated interactions between citizens and officials. While the possibility to collusion lowers the effectiveness of competition, officials are unable to sustain collusion in the long run.
Keywords: Extortionary Corruption; Monopoly; Competition; Collusion (search for similar items in EconPapers)
JEL-codes: C92 D49 D73 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp, nep-law and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
https://coss.fsu.edu/econpapers/wpaper/wp2016_10_01.pdf First version, 2016-10 (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:fsu:wpaper:wp2016_10_01
Ordering information: This working paper can be ordered from
Access Statistics for this paper
More papers in Working Papers from Department of Economics, Florida State University Contact information at EDIRC.
Bibliographic data for series maintained by Dmitry Ryvkin ().