Privatization, Competition, and Corruption: How Characteristics of Bribe Takers and Payers Affect Bribe Payments to Utilities

47 Pages Posted: 31 Oct 2002  

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: October 2002

Abstract

Many recent studies have looked at the macroeconomic, cultural and institutional determinants of corruption at the cross-national level. This study complements these existing cross-country studies by focusing on firm-level evidence of microeconomic factors affecting bribes paid in a single sector of the economy. Using enterprise-level data on bribes paid to utilities in 21 transition economies in Eastern Europe and Central Asia, we examine how characteristics of the utilities taking bribes and the firms paying bribes affect the equilibrium level of corruption in the sector. Bribe takers (utility employees) are more likely to take bribes in countries with greater constraints on utility capacity, lower levels of competition in the utility sector, and where utilities are state-owned. Bribe payers (enterprises) are more likely to pay bribes when they are more profitable, have greater overdue payment to utilities, and are de novo private firms. A thorny issue in the empirical literature on corruption is how to distinguish between the "endogenous harassment" and "speed money" theories of corruption. The former receives stronger support from some of the results than the latter.

Keywords: Corruption, Bribes, Ownership, Competition and Privatization

JEL Classification: K4, L1, L9

Suggested Citation

Clarke, George R. G. and Xu, Lixin Colin, Privatization, Competition, and Corruption: How Characteristics of Bribe Takers and Payers Affect Bribe Payments to Utilities (October 2002). FEEM Working Paper No. 82.2002. Available at SSRN: https://ssrn.com/abstract=342921 or http://dx.doi.org/10.2139/ssrn.342921

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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