Working Paper: CEPR ID: DP5712
Authors: Raymond Fisman; Roberta Gatti
Abstract: We develop a simple bargaining framework of corruption where firms pay bribes to avoid regulation. Consistent with this setup, we find that time spent bargaining with bureaucrats and amount of bribe payments are positively correlated, but that this association is weaker (and, thus, corruption more 'efficient') when the terms of unofficial contracts are known to the firms. We also show that institutional arrangements that result in lower uncertainty in bargaining for bribes attenuate the impact of corruption on firm growth.
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JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| bribes paid by firms (L14) | time spent negotiating with bureaucrats (D73) |
| lower bargaining frictions (D43) | weaker association between bribery and time spent with bureaucrats (D73) |
| lower uncertainty surrounding bribery process (H57) | lower bargaining frictions (D43) |
| lower uncertainty surrounding bribery process (H57) | stronger firm growth outcomes (L25) |
| institutional quality (L15) | efficiency of corruption (D73) |
| legal origin of a country (K15) | predictability of bribe payments (D73) |