Rents, Competition, and Corruption | Zendy

Alberto Ades | Zendy; Rafael Di Tella | Zendy

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Rents, Competition, and Corruption

Author(s) -

Alberto Ades,

Rafael Di Tella

Publication year - 1999

Publication title -

american economic review

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 16.936

H-Index - 297

eISSN - 1944-7981

pISSN - 0002-8282

DOI - 10.1257/aer.89.4.982

Subject(s) - economic rent , economics , language change , competition (biology) , neoclassical economics , microeconomics , art , ecology , literature , biology

Theoretically the effect of competition on corruption is ambiguous. Less competition means firms enjoy higher rents, so that bureaucrats with control rights over them, such as tax inspectors or regulators, have higher incentives to engage in malfeasant behavior. Examples of a positive connection between rents and corruption abound, however. The hypothesis that natural rents, as in the case of oil, and rents induced by lack of product market competition foster corruption, is examined. A model is set up connecting rents to corruption.

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