Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/63338
Authors: 
Dutta, Indranil
Mishra, Ajit
Year of Publication: 
2005
Series/Report no.: 
Research Paper, UNU-WIDER, United Nations University (UNU) 2005/46
Abstract: 
We analyze the relation between inequality, corruption and competition in a developing economy context where markets are imperfect. We consider an economy where different types of households (efficient and inefficient) choose to undertake production activities. For production, households borrow capital from the credit market. They also incur non-input costs which they could avoid by bribing inspectors. Due to information asymmetry and wealth inequality, the credit market fails to screen out the inefficient types. In addition to the imperfect screening, the inefficient type’s entry is further facilitated by corruption. We analyze the market equilibrium and look at some of the implications. We show that a rise in inequality can lead to an increase in corruption along with greater competition. – corruption ; competition ; credit market ; inequality ; screening
JEL: 
D31
D43
K42
O12
ISBN: 
9291907294
Document Type: 
Working Paper

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