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Corruption and firm behavior

Sequeira, Sandra and Djankov, Simeon (2013) Corruption and firm behavior. The London School of Economics and Political Science, London, UK.

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Abstract

This paper investigates how corruption affects firrm behavior. Firms can engage in two types of corruption when seeking a public service: cost-reducing "collusive" corruption and cost increasing "coercive" corruption. Using an original and unusually rich dataset on bribe payments at ports matched to firrm-level data, we observe how firms respond to each type of corruption by adjusting their shipping and sourcing strategies. "Collusive" corruption is associated with higher usage of the corrupt port, while "coercive" corruption is associated with reduced demand for port services. Our results suggest that firms respond to the opportunities and challenges created by different types of corruption, organizing production in a way that increases or decreases demand for the public service. Understanding how firms respond to corruption has important implications for how we conceptualize, identify and measure the overall impact of corruption on economic activity.

Item Type: Monograph (Working Paper)
Official URL: http://www.lse.ac.uk/
Additional Information: © 2013 The Authors
Library of Congress subject classification: H Social Sciences > H Social Sciences (General)
H Social Sciences > HE Transportation and Communications
Journal of Economic Literature Classification System: D - Microeconomics > D2 - Production and Organizations > D23 - Organizational Behavior; Transaction Costs; Property Rights
D - Microeconomics > D7 - Analysis of Collective Decision-Making > D73 - Bureaucracy; Administrative Processes in Public Organizations; Corruption
L - Industrial Organization > L9 - Industry Studies: Transportation and Utilities > L91 - Transportation: General
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O12 - Microeconomic Analyses of Economic Development
R - Urban, Rural, and Regional Economics > R4 - Transportation Systems > R41 - Transportation: Demand, Supply, and Congestion; Safety and Accidents; Transportation Noise
Sets: Departments > International Development
Collections > Economists Online
Research centres and groups > Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD)
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 14 Nov 2013 10:43
URL: http://eprints.lse.ac.uk/54321/

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