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When competition corrupts: a theoretical analysis of market structure and the incidence of corruption

Kaushik Basu, Tamara McGavock and Boyang Zhang ()

No 6596, Policy Research Working Paper Series from The World Bank

Abstract: The paper develops a simple model to demonstrate that, paradoxically, greater competition may exacerbate the problem of corruption. Market participants engaging in corrupt practices enjoy lower production costs -- maybe because they pay a bribe to avoid installing the environmental safeguards required by law -- such that honest players are driven out of the market when the market becomes sufficiently competitive.

Keywords: Public Sector Corruption&Anticorruption Measures; Water and Industry; Markets and Market Access; Gender and Law; Microfinance (search for similar items in EconPapers)
Date: 2013-09-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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