IS MORE COMPETITION ALWAYS BETTER? AN EXPERIMENTAL STUDY OF EXTORTIONARY CORRUPTION. (27th July 2018)

• Record Type: Journal Article
• Authors: Ryvkin, Dmitry; Serra, Danila
• Is Part Of: Economic inquiry. Volume 57:Number 1(2019)
• Page Start: 50
• Page End: 72
• Publication Date: 2018-07-27
• Subjects: Economics -- Periodicals; 330.05
• DOI: 10.1111/ecin.12703
• Languages: English
• ISSNs: 0095-2583

Abstract

Abstract : Using a laboratory experiment, we assess whether increasing competition among public officials reduces extortionary corruption. We find that increasing the number of providers has no effect on bribe demands when citizens' search costs are high, but it increases corruption when search costs are low. The effect is absent in a parallel setting framed as a standard market, which we attribute to citizens using a nonsequential search strategy as opposed to sequential search in the corruption setting. We conclude that efforts to reduce search costs, such as infrastructure investments, are preferable to anti‐corruption policies aimed at increasing the number of providers. ( JEL D73, D49, C91)