Ownership, Competition, and Corruption: Bribe Takers Versus Bribe Payers

34 Pages Posted: 28 Jan 2002

See all articles by George R. G. Clarke

George R. G. Clarke

Texas A&M International University - A.R. Sanchez Jr., School of Business

Lixin Colin Xu

World Bank - Development Research Group (DECRG)

Date Written: February 2002

Abstract

Over the past few years, many studies have looked at the macroeconomic, cultural, and institutional determinants of corruption. This study complements these cross-country studies by focusing on microeconomic factors that affect bribes paid in a single sector of the economy. Using enterprise-level data on bribes paid to utilities in 21 transition economies in Easter Europe and Central Asia, Clarke and Xu look at how characteristics of the firms paying bribes (such as ownership, profitability, and size) and characteristics of the utilities taking bribes (such as competition and utility capacity) affect the equilibrium level of corruption in the sector. On the side of bribe payers, enterprises that are more profitable, enterprises that have greater overdue payment to utilities, and de novo private firms pay higher bribes. On the side of bribe takers, bribes paid to utilities are higher in countries with greater constraints on utility capacity, lower levels of competition in the utility sector, and where utilities are state-owned. Bribes in the utility sector are also correlated with many of the macroeconomic and political factors that previous studies have found to affect the overall level of corruption.

This paper - a product of Regulation and Competition Policy, Development Research Group - is part of a larger effort in the group to understand the economic impact of privatization and competition in network utilities. The authors may be contacted at gclarke@worldbank.org or lxu1@worldbank.org.

JEL Classification: K4, L1, L9

Suggested Citation

Clarke, George and Xu, Lixin Colin, Ownership, Competition, and Corruption: Bribe Takers Versus Bribe Payers (February 2002). World Bank Policy Research Working Paper No. 2783. Available at SSRN: https://ssrn.com/abstract=298179

George Clarke (Contact Author)

Texas A&M International University - A.R. Sanchez Jr., School of Business ( email )

5201 University Blvd.
Laredo, TX 78041-1900
United States

Lixin Colin Xu

World Bank - Development Research Group (DECRG) ( email )

1818 H Street, N.W.
MC 3-427
Washington, DC 20433
United States
202-473-4664 (Phone)
202-522-1155 (Fax)

HOME PAGE: http://econ.worldbank.org/staff/cxu

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