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dc.contributor.authorCampos, Nauro F.en_US
dc.contributor.authorEstrin, Saulen_US
dc.contributor.authorProto, Eugenioen_US
dc.date.accessioned2011-06-21en_US
dc.date.accessioned2011-06-28T13:57:00Z-
dc.date.available2011-06-28T13:57:00Z-
dc.date.issued2010en_US
dc.identifier.urihttp://hdl.handle.net/10419/46176-
dc.description.abstractConventional wisdom depicts corruption as a tax on incumbent firms. This paper challenges this view in two ways. First, by arguing that corruption matters not so much because of the value of the bribe (tax), but because of another less studied feature of corruption, namely bribe unavoidability. Second, we argue that the social costs of corruption arise not because corruption hurts incumbent firms, but mostly because it acts as a powerful barrier to the entry of new firms. Corruption sands and greases in tandem: it helps incumbent firms (on balance) and it hurts potential entrants. We put forward a model in which a bureaucrat chooses entry barriers to optimize bribe revenues. When the capacity to collect bribes is high, it is optimal to allow high levels of oligopoly power to incumbents. Conversely, the more avoidable are the bribes, the more firms are allowed into the market. These ideas are tested using a unique, representative sample of Brazilian manufacturing firms. Consistently with our theoretical model, we show that corruption (a) is ranked as the most important barrier to entry (above finance, taxes and regulation) and (b) while bribes' unavoidability is positively related to firm performance, the size of the bribe is not.en_US
dc.language.isoengen_US
dc.publisherIZA Bonnen_US
dc.relation.ispartofseriesDiscussion paper series // Forschungsinstitut zur Zukunft der Arbeit 5243en_US
dc.subject.jelO12en_US
dc.subject.jelD23en_US
dc.subject.jelK20en_US
dc.subject.jelO17en_US
dc.subject.jelK30en_US
dc.subject.ddc330en_US
dc.subject.keywordcorruptionen_US
dc.subject.keywordbarriers to entryen_US
dc.subject.keywordfirm performanceen_US
dc.titleCorruption as a barrier to entry: Theory and evidenceen_US
dc.typeWorking Paperen_US
dc.identifier.ppn662500199en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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