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Inequality, Corruption, and Competition in the Presence of Market Imperfections

Indranil Dutta and Ajit Mishra

No RP2005-46, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: We analyze the relation between inequality, corruption and competition in a developing economy context where markets are imperfect. We consider an economy where different types of households (efficient and inefficient) choose to undertake production activities. For production, households borrow capital from the credit market. They also incur non-input costs which they could avoid by bribing inspectors. Due to information asymmetry and wealth inequality, the credit market fails to screen out the inefficient types.

Keywords: Econometric models (Economic development); Equality and inequality; Equilibrium (Economics); Corruption (search for similar items in EconPapers)
Date: 2005
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Working Paper: Inequality, Corruption, and Competition in the Presence of Market Imperfections (2010) Downloads
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