Corruption and Product Market Competition ∗

  title={Corruption and Product Market Competition ∗},
  author={St{\'e}phane Straub},
It is generally considered that more competition might help curb corruption, as rents, which motivate corrupt agreements, are decreasing in the degree of competition. This paper proposes a framework to analyze the relationship between corruption and competition. It studies the optimal incentive scheme for potentially corrupt officials in charge of inspecting firms that compete in the product market. Given that bribe-taking is sometimes tolerated in equilibrium, for specific values of the… CONTINUE READING