Regulating Corruption in International Markets: Why Governments Introduce Laws They Fail to Enforce

CC/flicr. License: https://creativecommons.org/licenses/by/2.0/

Tina Søreide (2018)

Søreide, Tina, Regulating Corruption in International Markets: Why Governments Introduce Laws They Fail to Enforce (December 12, 2017). The Oxford Handbook on International Economic Governance and Market Regulation. Edited by Eric Brousseau, Jean Michel Glachant and Jérôme Sgard. 2018 Forthcoming.

Markets and societies need protection against corruption. Though governments have introduced tougher regulations against the problem, enforcement failure is common. This chapter explains why. The nature of corruption makes the problem difficult to control, enforcement functions are dysfunctional, and political quests for commercial benefits reduce government commitment. Forces that strengthen the effect of anticorruption regulations nevertheless exist. Across the globe, enforcement agencies are starting to pick up economic ideas on how to break the trust between those who collude and how to incentivize firms to selfreport incidents and self-police their operations.

Increasingly, firms want returns from their investment in corporate compliance, and major players in the private sector support policy initiatives for predictable and consistent law enforcement. Combined with regulations that target the problem indirectly — such as competition oversight, financial oversight, anti-money laundering — the costs associated with bribery outweigh the benefits for an increasing share of market players.

Available at SSRN: https://ssrn.com/abstract=3086715