Bargaining, Corruption and Trade: Evidence from Small-Scale Traders in Kenya

This research project focuses on a trade barrier for small-scale cross-border traders. These traders (mostly women) face harassment and pay bribes to cross the border, increasing their-already substantial-trade costs. An asymmetry of information between traders and border agents about what traders should legally be paying may play a significant role in fueling corruption. This project aims to understand the role played by corruption in cross-border trading and shed light on what the process of bargaining for a bribe looks like. Through a RCT, we test whether giving information to traders about the correct tariff can affect bargaining, lower the value of bribes paid at the border and affect small-scale traders’ choices of trade route. Such reductions in trade costs may increase and/or formalize trade, affect traders’ behaviors, increase traders’ profit and have spillover effects along the value chain, e.g., on farmers and/or affect prices in local markets. We also conduct an audit study to collect information about border agents’ behaviors and demand for bribes.