In the private sector, corruption increases the cost of business through the price of illicit payments themselves, the management cost of negotiating with officials and the risk of breached agreements or detection. Although some claim corruption reduces costs by cutting bureaucracy, the availability of bribes can also induce officials to contrive new rules and delays. Openly removing costly and lengthy regulations are better than covertly allowing them to be bypassed by using bribes. Where corruption inflates the cost of business, it also distorts the playing field, shielding firms with connections from competition and thereby sustaining inefficient firms.

Corruption raises the cost of business because of illegal payments in what sector?