PHYSICS 102 Lecture Notes - Lecture 20: Factors Of Production, Oligopoly, Nepotism
Document Summary
Corrupt protection for sale to firms: evidence from indonesia. In developing countries, politicians are more interested in protecting particular individuals and firms connected to them, rather than industries as a whole. Tariffs are not firm-specific (and under penalties of the wto), which is why import licenses are assigned on the basis of corruption and nepotistic personal relationships. Nepotism is favoritism granted to relatives: introduction. Protection involves more of a corrupt contract in most developing countries where politicians may provide trade licenses, either in exchange for bribes or due to a good relationship between politician and business man. The purpose here is to only protect a single firm, not a whole industry, from foreign and domestic competitors. Suharto s son has been granted 12 licenses for his company, whereas competitors either cannot import raw materials at all or have been granted just 3 to 4 licenses. Wheat to produce flour), at cheaper rates than the world market price.
