Trinh Nguyen, C; Thi Thu Tra, P; Thi Cam Van, H and Nguyen, D (2024) Corruption, market structure, and industry competition in the Vietnamese construction sector. Construction Management and Economics, 42(1), pp. 54-69. ISSN 01446193
Abstract
The Vietnamese construction sector is arguably the country’s industry most vulnerable to corruption, leading to poor functioning of the sector. This analysis empirically investigates how corruption affects competition in the construction industry, and how different market structures shape different types of corruption and its potentially different impacts. Our empirical models for industry competition are estimated on a panel of 33,045 year-observations using the Fractional Binomial Logit model. The findings demonstrate that corruption reduces competition, and that the effects of corruption depend on the type of corruption and market structure in which firms operate. We find evidence that corruption is characterized by collusion between local authorities and dominant firms in highly concentrated markets, leading to the persistent concentration of the sector in highly corrupt areas. In areas with lower corruption, corruption is characterized by bureaucratic holdups while lowered corruption increases industry competition. Petty corruption is observed in less corrupt areas while it does not affect industry competition. The finding suggests that promoting transparency in public procurement regulatory processes enhances industry competition and mitigates corruption risks associated with different market structures. Additionally, implementing reforms to ensure equitable access to reliable public reporting and services can facilitate a more concentrated yet efficient industry structure.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | collusion; corruption; industry competition; market share; market structure; Vietnam |
| Index terms: | Vietnam, local authority, collusion, corruption, holdup, evidence, competition, construction sector, market share, construction industry, markets, transparency |
| Subjects: | evaluation and assessment methods, economic analysis, tendering, economics, Geography, professional development, market analysis, sociology, professional ethics, industry analysis |
| Topics: | Information Management, Geographical Context, Research Practice, Business Strategy, Procurement, Stakeholder Management, Supply Chain Management, Legal Issues |
| Descriptive scope: | 4 PCTA |
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