Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/269886 
Year of Publication: 
2021
Series/Report no.: 
Working Paper Series No. 16
Publisher: 
Bocconi University, Centre for Research on Geography, Resources, Environment, Energy and Networks (GREEN), Milan
Abstract: 
We study the relationship between collusion and corruption in a stylized model of repeated procurement where the cost of reporting corrupt bureaucrats gives rise to a free riding problem. As in Dixit (2015, 2016), cooperation among honest suppliers alleviates free-riding in reporting. However, it also facilitates collusion in bidding by increasing the value of the collusive rent. In turn, bidding collusion facilitates cooperation in reporting by increasing the value of having honest bureaucrats, generating a trade-off. When the likelihood of corruption is high and competition is weak, collusion may be a price worth paying to curb corruption.
Subjects: 
Bribes
cartels
collusion
corruption
free-riding
JEL: 
D44
D73
H57
L41
Document Type: 
Working Paper

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