WHO MUST PAY BRIBES AND HOW MUCH? EVIDENCE
FROM A CROSS SECTION OF FIRMS*
JAKOB SVENSSON
Abstract：This paper uses a unique data set on corruption containing quantitative
information on bribe payments of Ugandan firms. The data have two striking
features: not all firms report that they need to pay bribes, and there is considerable
variation in reported graft across firms facing similar institutions/policies.
We propose an explanation for these patterns, based on differences in control
rights and bargaining strength across firms. Consistent with the control rights/
bargaining hypotheses, we find that the incidence of corruption can be explained
by the variation in policies/regulations across industries. How much must bribepaying
firms pay? Combining the quantitative data on corruption with detailed
financial information from the surveyed firms, we show that firms’ “ability to pay”
and firms’ “refusal power” can explain a large part of the variation in bribes across
graft-reporting firms. These results suggest that public officials act as price (bribe)
discriminators, and that prices of public services are partly determined in order to
extract bribes.