IDEAS home Printed from https://ideas.repec.org/a/kap/pubcho/v201y2024i1d10.1007_s11127-024-01169-x.html
   My bibliography  Save this article

Corruption, bribery, and market reform

Author

Listed:
  • Hamid Beladi

    (University of Texas at San Antonio)

  • Sugata Marjit

    (Hong Kong Poytechnic University)

  • Vivekananda Mukherjee

    (BITS-Pilani, Hyderabad Campus)

Abstract

This paper revisits the relationship between rent-seeking and market reform. We consider a scenario where less efficient domestic and more efficient foreign firms are engaged in Cournot competition bribery. The local firm pays for imposing a cost on the foreign firms; the foreign firms pay so that the local competitor does not obtain an overwhelming advantage. With corrupt politicians, free trade will only be adopted if it maximizes the value of the bribes they receive. A positive relationship between free-trade reform and corruption can occur when foreign firms face little competition or if they are not sufficiently efficient compared to domestic firms. On the other hand, when foreign firms operate in a competitive environment, radical free trade reduces the supply of bribes to politicians, which is precisely why such trade is not adopted. If the number of foreign firms is limited, both drastic reform and corruption are facilitated. With competition from a large number of foreign firms and the existence of a relatively efficient local firm, no reform is implemented, and the level of corruption remains unchanged.

Suggested Citation

  • Hamid Beladi & Sugata Marjit & Vivekananda Mukherjee, 2024. "Corruption, bribery, and market reform," Public Choice, Springer, vol. 201(1), pages 309-325, October.
    • Handle: RePEc:kap:pubcho:v:201:y:2024:i:1:d:10.1007_s11127-024-01169-x
    DOI: 10.1007/s11127-024-01169-x
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11127-024-01169-x
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11127-024-01169-x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Rafael Di Tella & Alberto Ades, 1999. "Rents, Competition, and Corruption," American Economic Review, American Economic Association, vol. 89(4), pages 982-993, September.
    2. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
    3. Jacob K. Goeree & Charles A. Holt, 2001. "Ten Little Treasures of Game Theory and Ten Intuitive Contradictions," American Economic Review, American Economic Association, vol. 91(5), pages 1402-1422, December.
    4. Lambsdorff, Johann Graf, 2002. "Corruption and Rent-Seeking," Public Choice, Springer, vol. 113(1-2), pages 97-125, October.
    5. Sajal Lahiri & Yoshiyasu Ono, 1999. "Optimal Tariffs in the Presence of Middlemen," Canadian Journal of Economics, Canadian Economics Association, vol. 32(1), pages 55-70, February.
    6. Bonfiglioli, Alessandra & Crinò, Rosario & Gancia, Gino, 2021. "Concentration in international markets: Evidence from US imports," Journal of Monetary Economics, Elsevier, vol. 121(C), pages 19-39.
    7. Arye L. Hillman & Heinrich W. Ursprung, 2000. "Political culture and economic decline," Springer Books, in: Roger D. Congleton & Kai A. Konrad & Arye L. Hillman (ed.), 40 Years of Research on Rent Seeking 2, pages 219-243, Springer.
    8. Krueger, Anne O, 1974. "The Political Economy of the Rent-Seeking Society," American Economic Review, American Economic Association, vol. 64(3), pages 291-303, June.
    9. Pranab Bardhan, 1997. "Corruption and Development: A Review of Issues," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1320-1346, September.
    10. Alexeev, Michael & Song, Yunah, 2013. "Corruption and product market competition: An empirical investigation," Journal of Development Economics, Elsevier, vol. 103(C), pages 154-166.
    11. Chaudhuri, Kausik & Schneider, Friedrich & Chattopadhyay, Sumana, 2006. "The size and development of the shadow economy: An empirical investigation from states of India," Journal of Development Economics, Elsevier, vol. 80(2), pages 428-443, August.
    12. Devashish Mitra, 2016. "Endogenous Lobby Formation and Endogenous Protection: A Long-Run Model of Trade Policy Determination," World Scientific Book Chapters, in: The Political Economy of Trade Policy Theory, Evidence and Applications, chapter 1, pages 3-21, World Scientific Publishing Co. Pte. Ltd..
    13. Arye L. Hillman & Heinrich W. Ursprung, 2008. "Domestic Politics, Foreign Interests, and International Trade Policy," Springer Books, in: Roger D. Congleton & Kai A. Konrad & Arye L. Hillman (ed.), 40 Years of Research on Rent Seeking 2, pages 113-129, Springer.
    14. Hao, Zhuoqun & Liu, Yu & Zhang, Jinfan & Zhao, Xiaoxue, 2020. "Political connection, corporate philanthropy and efficiency: Evidence from China’s anti-corruption campaign," Journal of Comparative Economics, Elsevier, vol. 48(3), pages 688-708.
    15. Robert D. Tollison & Richard E. Wagner, 1991. "Romance, Realism, and Economic Reform," Kyklos, Wiley Blackwell, vol. 44(1), pages 57-70, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marjit, Sugata & Mukherjee, Vivekananda, 2014. "Rent-Seeking and Reform: Relationship Revisited," MPRA Paper 56443, University Library of Munich, Germany.
    2. Hessami, Zohal, 2010. "Corruption and the Composition of Public Expenditures: Evidence from OECD Countries," MPRA Paper 25945, University Library of Munich, Germany.
    3. Frédéric Boehm, 2005. "Corrupción y captura en la regulación de los servicios públicos," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 7(13), pages 245-263, July-Dece.
    4. Jellal, Mohamed, 2014. "Firmes industrielles concurrence et corruption [Industrial firms competition and corruption]," MPRA Paper 57284, University Library of Munich, Germany.
    5. Stéphane Straub, 2009. "Regulatory Intervention, Corruption and Competition," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 35(1), pages 123-148, September.
    6. Arteaga, Fernando & Desierto, Desiree & Koyama, Mark, 2024. "Shipwrecked by rents," Journal of Development Economics, Elsevier, vol. 168(C).
    7. Arye L. Hillman & Heinrich W. Ursprung, 2016. "Where are the rent seekers?," Constitutional Political Economy, Springer, vol. 27(2), pages 124-141, June.
    8. Fredriksson, Per G. & Vollebergh, Herman R. J. & Dijkgraaf, Elbert, 2004. "Corruption and energy efficiency in OECD countries: theory and evidence," Journal of Environmental Economics and Management, Elsevier, vol. 47(2), pages 207-231, March.
    9. Gökhan Karahan & Laura Razzolini & William Shughart, 2006. "No Pretense to Honesty: County Government Corruption in Mississippi," Economics of Governance, Springer, vol. 7(3), pages 211-227, August.
    10. Hessami, Zohal, 2014. "Political corruption, public procurement, and budget composition: Theory and evidence from OECD countries," European Journal of Political Economy, Elsevier, vol. 34(C), pages 372-389.
    11. Wolfgang Maennig, 2002. "On the Economics of Doping and Corruption in International Sports," Journal of Sports Economics, , vol. 3(1), pages 61-89, February.
    12. Andreas Assiotis & Kevin Sylwester, 2013. "Do the effects of corruption upon growth differ between democracies and autocracies?," University of Cyprus Working Papers in Economics 06-2013, University of Cyprus Department of Economics.
    13. Pokrivcak, Jan, 2007. "Economics and Political Economy of Regional Trade Agreements," Working Papers 7286, TRADEAG - Agricultural Trade Agreements.
    14. Toke S. Aidt, 2016. "Rent seeking and the economics of corruption," Constitutional Political Economy, Springer, vol. 27(2), pages 142-157, June.
    15. Ardjouma Sombie, 2023. "An empirical analysis using new instrumental variable methods of distributional effects of corruption on public expenditures in developing countries," SN Business & Economics, Springer, vol. 3(3), pages 1-26, March.
    16. Choudhury, Sanchari, 2019. "WTO membership and corruption," European Journal of Political Economy, Elsevier, vol. 60(C).
    17. Roberta Gatti & Stefano Paternostro & Jamele Rigolini, 2003. "Individual attitudes toward corruption: do social effects matter?," Policy Research Working Paper Series 3122, The World Bank.
    18. Ha-Joon Chang & Ali Cheema & L. Mises, 2002. "Conditions For Successful Technology Policy In Developing Countries—Learning Rents, State Structures, And Institutions," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 11(4-5), pages 369-398.
    19. Søreide, Tina, 2009. "Too risk averse to stay honest?: Business corruption, uncertainty and attitudes toward risk," International Review of Law and Economics, Elsevier, vol. 29(4), pages 388-395, December.
    20. Clarke, George R. G. & Xu, Lixin Colin, 2004. "Privatization, competition, and corruption: how characteristics of bribe takers and payers affect bribes to utilities," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 2067-2097, August.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:pubcho:v:201:y:2024:i:1:d:10.1007_s11127-024-01169-x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.