Estimation of Interrelation between Corruption and Competition

The article is devoted to the quantitative assessment of interrelation between corruption and competition. The authors summarize the results of theoretical and empirical studies of the relationships, as well as conducting their own assessment based on international data. The results show that the relation in the two-way one. On the one hand, increasing intensity of competition leads corruption behavior to become more prevalent. On the other hand, corruption oppresses competition, thus causing additional negative effects on social welfare. The last effect, however, is pronounced for countries with low and moderate bureaucratic barriers. If the barriers are high, the effect becomes opposite: corruption may support competition. Thus, reduction and facilitation of bureaucratic procedures is an important measure of the state policy aimed to reduce corruption and promote competition. The study revealed no statistically significant impact of income per capita on intensity of competition and the level of corruption in the country. The hypothesis that increase in freedom of mass media restrains corruption is also rejected. Thus there is no reason to consider this tool as an effective measure of anti-corruption policies. An important factor influencing both variables, is the development of institutions (property rights protection, the efficiency of the judicial system and law enforcement agencies). This result is consistent with the results of theoretical and empirical studies of other authors and emphasizes the importance of developing institutions to achieve both the goal of reducing the level of corruption and the development of competition in the domestic market.