Combating Corruptions in International Business Transactions

Abstract

We analyze the impact of different types of international conventions that require signatory countries to penalize domestic firms that are found to have bribed foreign public officials. We analyze enforcement of penalties under a convention styled after the OECD's 'Convention on Combating Bribery of Foreign Public Officials in International Business Transactions', in which signatory countries commit to prosecuting firms that have bribed public officials of any foreign country. We compare the results with the case in which the convention requires signatory countries to commit to prosecuting firms that have bribed public officials of signatory countries only. We argue that the second type of convention is more likely to ensure enforcement of penalties on firms found to have bribed foreign public officials.