Bribery, Secrecy, and Communication: Theory and Evidence from Firms

TL;DR

This paper develops a model and provides empirical evidence on how firms pay different types of bribes, hide resources, and how bureaucrats handle information, revealing complex dynamics in corruption practices.

Contribution

It introduces a model capturing multiple informational scenarios in corruption and empirically tests these scenarios using data from Tajikistan firms.

Findings

Firms make both voluntary and involuntary bribe payments

Firms hide resources to reduce involuntary bribes

Bureaucrats do not share bribery-relevant information

Abstract

This paper studies if firms pay different types of bribes, and if corrupt bureaucrats have perfect information about resources of bribe-paying firms. We construct a model of corruption that allows for multiple informational scenarios in a single market for bribes and empirically test these scenarios on the original dataset of 429 firms operating in Tajikistan. The results indicate that firms simultaneously make voluntary and involuntary bribe payments, firms hide resources from corrupt bureaucrats to reduce involuntary bribe payments, and bureaucrats who receive voluntary bribe payments do not share bribery-relevant information with other bureaucrats.