Combating corruption in international business transactions

International business transactions pose the problem of deterring bribing of public officials by foreign firms. We first analyse a convention styled after the OECD's ‘Convention on Combating Bribery of Foreign Public Officials in International Business Transactions’, which requires signatory countries to proceed against firms that have bribed public officials of any foreign country. We then study the case in which the convention requires signatory countries to proceed against firms that have bribed public officials of signatory countries only. We argue that the second type of convention is more likely to ensure the enforcement of penalties.Marco Celentani gratefully acknowledges the financial support of Fundación BBVA, Fundación Ramón Areces, and MCYT (Spain) under project BEC2002‐03715. Juan‐José Ganuza gratefully acknowledges the financial support of MCYT (Spain) under project BEC2000‐1026, and fellowship Ramón y Cajal