Corruption, ranking and competition

The three papers in this dissertation aim to provide new empirical evidence for two topics related to competition among businesses and individuals: corruption and ranking. The first two papers tackle the corruption topic using the internal records from two industrial suppliers, who pay kickbacks in order to compete and sell their products to organizations in a highly corrupt emerging market. The first paper exploits a regulation experiment and estimates the effect of several important types of procurement auctions on corruption. It shows that, to reduce corruption, auctions need to be open and non-discretionary. It also reveals the widespread practice of secret auctions employed by corrupt officials to identify the largest kickback-payers. The second paper studies the agency cost of delegation of authority within firms. It shows that delegation monotonically increases corruption, and delegation to middle managers is most costly to firms. The third paper asks whether ranking motivates individuals to compete. It reports a series of experiments conducted in Vietnam to test whether students were concerned with their performance ranks relative to others. The results showed that concern with rank, even when ranks were not publicly revealed, strongly motivated performance and competition. Competition is the engine of economic growth. A better understanding of the effect of corruption and ranking is essential to designing the institutions that promote competition and development.