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Please use this identifier to cite or link to this item: http://hdl.handle.net/10202/54

Title: Business Corruption, Uncertainty and Risk Aversion
Authors: Søreide, Tina
Keywords: Rent-seeking
Corruption
Firms
Risk
Issue Date: 2006
Publisher: Chr. Michelsen Institute
Series/Report no.: CMI Working paper
WP 2006: 4
Abstract: The presence of business-corruption in a market provokes firms to make choices between legal business approaches and illegal bribery. The outcome of a chosen strategy will usually be uncertain at the time the decision is made, and a firm’s decision will depend partly on its attitude towards risk. Drawing on the empirical data provided by a survey of 82 Norwegian exporting businesses, the paper proposes a theory about firm’s choices between legal and illegal business practices. It begins by describing the risks, uncertainties and benefits attached to bribery, and specifies their impact on firm’s propensity to offer bribes. It then demonstrates how risk averse firms can be more inclined to offer bribes than risk neutral, and even risk attracted firms. Although the analysis diverges from existing theory in stressing the differences between illegal and legal forms of rent-seeking, the findings correspond to the results reported in the literature on legal forms of rent-seeking.
URI: http://hdl.handle.net/10202/54
ISBN: 82-8062-142-3
ISSN: 0804-3639
Appears in Collections:CMI Collection (Reports, Working Papers, Articles etc.)

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