The paper aims to investigate the relationship among corruption, innovation and trade. We develop a model where a firm producing an innovation may pay some bribes to sell its own products in the domestic or international market. The government official may accept or not the bribes and choose whether or not to be honest, eventually, gaining some illegal beneficial. Firm’s profit may be affected by the costs of innovation and on the cost of corruption. Firm’s ability to sell new products in the foreign market also assumes a strategic role by playing a part in determining the efficient enterprises.
Key words: Corruption, Innovation, Export, Institutions
JEL Classification Codes: F13, D73, O31