Corruption and competition for resources

Bjorvatn, Kjetil; Søreide, Tina

doi:10.1007/s10797-013-9292-x

Cited by 3 publications

(1 citation statement)

References 24 publications

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“…Existing studies offer significant evidence of an inverse association between corruption and economic growth (Shleifer and Vishny ; Mauro ; Pellegrini and Gerlagh ; Ellis and Fender ; Gyimah‐Brempong and Munoz de Camacho ) and a positive association between corruption and the size of shadow economy (Buehn and Schneider ). Other studies offer evidence of negative impact of corruption on private investment and productivity of capital (Lambsdorff ; Swaleheen ; Bjorvatn and Soreide ), while a few find a negative impact of corruption on institutional quality and quality of business regulation (Breen and Gillanders ).…”

Section: Previous Researchmentioning

confidence: 99%

Public Corruption in the U.S. States and Its Impact on Public Debt Pricing

Moldogaziev¹,

Liu²,

Luby

2017

Kyklos

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Summary This study evaluates the levels of public corruption in the American states and their impact on the prices of public debt sold by underwriting banks to retail investors. Results suggest that the markups paid by retail investors to underwriters decrease significantly with the incidence of public corruption. The relationship remains significant even when existing anti‐corruption enforcement efforts are taken into consideration. Extant literature shows that the issuers of public debt from relatively more corrupt jurisdictions receive lower prices from underwriting banks in wholesale transactions. We develop and empirically show the mechanism through which this can occur. We offer the first evidence that the public debt market exerts disciplining pressures on the American states with greater levels of public corruption. When purchasing state‐issued public debt, retail buyers appear to demand narrower markups by factoring in public corruption. This, we argue, is an important reason why underwriting banks offer lower prices when dealing with less disciplined fiscal sovereigns.

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Section: Previous Researchmentioning

confidence: 99%

Public Corruption in the U.S. States and Its Impact on Public Debt Pricing

Moldogaziev¹,

Liu²,

Luby

2017

Kyklos

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An economic analysis of debarment

Auriol

Søreide

2017

International Review of Law and Economics

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With a view to reducing the consequences of corruption in public procurement, many governments have introduced debarment of suppliers found guilty of corruption and some other forms of crime. This paper explores the market effects of debarment on public procurement. Debarment is found to make little difference in markets with high competition, while in markets with low competition it may deter corruption as long as firms value public procurement contracts in the future and there is a certain risk of being detected in corruption. On the other hand, debarment -when it works -has an anti-competitive effect, and this effect will contribute to facilitate collusion between suppliers. Debarment may work as a tool against collusion, but only if targeting one firm at the time (such as a ring-leader or the specific beneficiary when the collusion is detected) -and not all the members of a cartel. If designed with an understanding of the market mechanisms at play, debarment can deter both collusion and corruption, thus improving the results of public procurement. If so, most current debarment regimes need modification.JEL Classification: K21, K23, K42, L41, H57

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