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Bribe-Taking and Bureaucratic Competition: A Search Cost Model of Corruption

Eugene Kiselev

Brandeis University International Business School

October 30, 2012

Competition among bureaucrats for bribe revenue has often been viewed as a way to reduce the incidence and magnitude of bribe payments. This paper proposes a model where firms can search among multiple corrupt bureaucrats to find the cheapest bribe associated with obtaining a required service. Competition among bureaucrats can reduce the size of bribes only when all firms can search without cost. When search costs prohibit some firms from shopping around, competition actually increases the bribes that bureaucrats charge. This result is tested empirically using Russia as a case study. Using firm-level surveys and regional panel data I find evidence that more competition within the municipal administrative bureaucracy is associated with larger bribe payments made by firms. I conclude that bureaucratic competition for bribe revenue is not always a solution to the corruption problem.

Number of Pages in PDF File: 35

Keywords: Search Cost Model, Corruption, Competition, Bribes

JEL Classification: D72, D73, L00, D83

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Date posted: April 2, 2012 ; Last revised: October 31, 2012

Suggested Citation

Kiselev, Eugene, Bribe-Taking and Bureaucratic Competition: A Search Cost Model of Corruption (October 30, 2012). Available at SSRN: https://ssrn.com/abstract=2032239 or http://dx.doi.org/10.2139/ssrn.2032239

Contact Information

Eugene Kiselev (Contact Author)
Brandeis University International Business School ( email )
Mailstop 32
Waltham, MA 02454-9110
United States
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