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Price Discrimination in Bribe Payments: Evidence from Informal Cross-Border Trade in West Africa

Author

Listed:
  • Sami Bensassi

    (University of Birmingham)

  • Joachim Jarreau

    (PSL Université Paris-Dauphine, PSL Research University, IRD, LEDa, DIAL, Paris, France.)

Abstract

What factors explain the persistence and pervasiveness of corruption in certain parts of the world? In West Africa, many day-to-day transactions require the payment of bribes. Quantitative evidence on these bribes and their determinants is scarce. This paper sheds light on the level and the frequency of bribe payments in informal cross-border trade. It examines how bribes depend on the trade regime and on market structure. We rely on data from a survey of traders in Benin to estimate the determinants of bribe payments. We exploit variations in the trade regime across Benin's borders, as well as changes in trade restrictions over time and variations in route availability across space and time. We find that reductions in trade barriers help to lower bribes, but do not eliminate them, with bribes remaining frequent in liberalized trade regimes. These results suggest that collusive corruption - used to circumvent regulations and taxes - coexists with coercive corruption, where officials use their monopoly power to extract transfers from traders.

Suggested Citation

  • Sami Bensassi & Joachim Jarreau, 2019. "Price Discrimination in Bribe Payments: Evidence from Informal Cross-Border Trade in West Africa," Working Papers DT/2019/08, DIAL (Développement, Institutions et Mondialisation).
    • Handle: RePEc:dia:wpaper:dt2019-08
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    References listed on IDEAS

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    More about this item

    Keywords

    Informal trade; corruption; trade policy.;
    All these keywords.

    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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