Corruption-proof minimum regulation for `Zero emission': Status incentives - Bane or boon?

Preksha Jain () and Rupayan Pal

Indira Gandhi Institute of Development Research, Mumbai Working Papers from Indira Gandhi Institute of Development Research, Mumbai, India

Abstract: This paper explores the possibility of designing environmental regulation that ensures `zero emission', by promoting non-polluting `green' technology adoption by firms, without creating new rooms for corruption. It demonstrates that it is feasible to implement the `target equilibrium', in which there is `no emission and no corruption', through environmental regulation alone. It also characterizes the `target equilibrium' implementing `minimum environmental regulation', which corresponds to the least possible subsidy expenditure and the lowest possible tax burden on firms, in alternative scenarios. More interestingly, it shows that, in the presence of corruption possibilities, introduction of reputation enhancing non-monetary incentives for `green' technology adoption makes it harder to implement the target equilibrium'. It underscores that usefulness of status incentives to nudge firms' behaviour for environmental protection is rather limited. These are robust results.

Keywords: Zero emission; Corruption; Minimum environmental regulation; Non-monetary status incentive; Brown tax; Green technology subsidy (search for similar items in EconPapers)
JEL-codes: D73 H23 Q52 Q58 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2023-09
New Economics Papers: this item is included in nep-ene, nep-env and nep-res
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Persistent link: https://EconPapers.repec.org/RePEc:ind:igiwpp:2023-009

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