Publication: When Competition Corrupts : A Theoretical Analysis of Market Structure and the Incidence of Corruption
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.
“Basu, Kaushik; McGavock, Tamara; Zhang, Boyang. 2013. When Competition Corrupts : A Theoretical Analysis of Market Structure and the Incidence of Corruption. Policy Research Working Paper;No. 6596. © World Bank, Washington, DC. http://openknowledge.worldbank.org/handle/10986/16047 License: CC BY 3.0 IGO.”
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