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Can Bribes Buy Protection Against International Competition?
Unformatted Document Text:  Lemma 3: The effectiveness of bribes depends negatively on voters’ acceptance of corruption and their acceptance of trade restrictions. Proof: While these factors leave the demand for the official trade barrier r unchanged, the slope and curvature of the supply schedule given by (7) is increased by increasing either β (dislike of corruption) or γ (dislike of trade restrictions). 3. Data and empirical results The data used in this section derive from a number of sources. First, the data used to capture the extent of corruption in society is the Corruption Perception Index, developed by Johann Graf Lambsdorff and published annually since 1995 by the German NGO Transparency International. The data derive from a number of primary sources and are distributed between 1 (endemic corruption) and 10 (no corruption) and thus measure the ‘lack’ of corruption. I employ the data from 1995, 2000 and 2005, which means that the size of the period samples varies considerably (Transparency International, 2005). The set of dependent variables derive from the Fraser Institute that publishes data on economic freedom of which trade policy is part (Gartzke et al., 2005). These data cover the average tariff on imports (‘mean tariff’), and three indices of the lack of non- tariff barriers (NTB): ‘hidden barriers’, ‘costs of importing’, and ‘regulatory barriers’ of which I use the hidden barriers and regulatory barriers indices. The advantage of using the Fraser Institute indices derives from the fact that outcome measures such as openness, which has been used in previous literature, are also influenced by a number of other factors as e.g. geography, common borders, language and institutions (Andersson and Marcouiller, 2002; de Groot et al., 2004). Instead, these indices are intended to capture ‘pure’ trade policy including both tariff barriers and three different aspects of 11

Authors: Bjørnskov, Christian.
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Lemma 3: The effectiveness of bribes depends negatively on voters’ acceptance of
corruption and their acceptance of trade restrictions.
Proof: While these factors leave the demand for the official trade barrier r unchanged,
the slope and curvature of the supply schedule given by (7) is increased by increasing
either β (dislike of corruption) or γ (dislike of trade restrictions).
3. Data and empirical results
The data used in this section derive from a number of sources. First, the data used to
capture the extent of corruption in society is the Corruption Perception Index, developed
by Johann Graf Lambsdorff and published annually since 1995 by the German NGO
Transparency International. The data derive from a number of primary sources and are
distributed between 1 (endemic corruption) and 10 (no corruption) and thus measure the
‘lack’ of corruption. I employ the data from 1995, 2000 and 2005, which means that the
size of the period samples varies considerably (Transparency International, 2005).
The set of dependent variables derive from the Fraser Institute that publishes data
on economic freedom of which trade policy is part (Gartzke et al., 2005). These data
cover the average tariff on imports (‘mean tariff’), and three indices of the lack of non-
tariff barriers (NTB): ‘hidden barriers’, ‘costs of importing’, and ‘regulatory barriers’ of
which I use the hidden barriers and regulatory barriers indices. The advantage of using
the Fraser Institute indices derives from the fact that outcome measures such as
openness, which has been used in previous literature, are also influenced by a number of
other factors as e.g. geography, common borders, language and institutions (Andersson
and Marcouiller, 2002; de Groot et al., 2004). Instead, these indices are intended to
capture ‘pure’ trade policy including both tariff barriers and three different aspects of
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