This Note examines the opportunities for illicit gain that exist in all countries. It asks what factors determine the size and incidence of bribe payments and assesses the political, economic, and distributive consequences of corruption. Bribes are paid for two reasons--to obtain government benefits and to avoid costs. There is little evidence on how often officials, private firms, and individuals take advantage of corrupt opportunities and on how much money is paid in bribes. Surveys suggest that where corruption is endemic, it imposes a disproportionately high burden on the smallest firm. But, importantly, the most severe costs are often not the bribes themselves, but the underlying distortions they reveal. Despite the costs of widespread corruption, they are a symptom of disease, not the disease itself. Eliminating corruption makes no sense if the result is a rigid, unresponsive, autocratic government. Instead, anticorruption strategies should seek to improve the efficiency and fairness of government and to enhance the efficiency of the private sector.