The Industrial Organization of Corruption: Monopoly, Competition and Collusion

44 Pages Posted: 18 May 2017

See all articles by Dmitry Ryvkin

Dmitry Ryvkin

Florida State University

Danila Serra

Texas A&M University - Department of Economics

Date Written: February 10, 2017

Abstract

We experimentally investigate how the introduction of competition between public officials for the provision of a given license affects extortionary corruption, i.e., the demands of harassment bribes. We examine transactions that are likely to be one-shot, such as the delivery of a driver's license, and transactions that require frequent interactions between the parties and therefore allow for reputation building, such as yearly renewals of building permits. Finally, we examine officials' ability to collude by communicating before setting their bribe demands. We find that introducing competition significantly reduces corruption both in settings characterized by one-shot and by repeated interactions between citizens and officials. While the possibility of collusion lowers the effectiveness of competition, officials are unable to sustain collusion in the long run.

Keywords: Extortionary Corruption, Monopoly, Competition, Collusion, Experiment

JEL Classification: D73, D49, C92

Suggested Citation

Ryvkin, Dmitry and Serra, Danila, The Industrial Organization of Corruption: Monopoly, Competition and Collusion (February 10, 2017). Available at SSRN: https://ssrn.com/abstract=2852523 or http://dx.doi.org/10.2139/ssrn.2852523

Dmitry Ryvkin

Florida State University ( email )

Tallahassee, FL 30306-2180
United States

Danila Serra (Contact Author)

Texas A&M University - Department of Economics ( email )

5201 University Blvd.
College Station, TX 77843-4228
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
142
Abstract Views
735
rank
241,795
PlumX Metrics