Corruption, Entry and Pollution

Eleni Stathopoulou and Dimitrios Varvarigos (dv33@le.ac.uk)

No 13/21, Discussion Papers in Economics from Division of Economics, School of Business, University of Leicester

Abstract: We model an economy where imperfectly competitive firms choose whether to employ a dirty technology and pay an emission tax or employ a clean technology and incur the cost of its adoption. Bureaucrats who are entrusted with the task of monitoring the emissions of each firm, are corruptible in the sense that they may accept bribes in order to mislead authorities on the firms’ actual emissions. Market entry is an important element in the relation between corruption and pollution. Particularly, the incidence of corruption increases the number of entrants in the market, while the bureaucrats’ incentives to be corrupt are higher in a market with more competitors. We find multiple equilibria where both corruption and pollution are either high or low.

Keywords: Corruption; Pollution; Market entry (search for similar items in EconPapers)
JEL-codes: L13 Q53 Q58 (search for similar items in EconPapers)
Date: 2013-09
New Economics Papers: this item is included in nep-com, nep-ene, nep-env, nep-law and nep-res
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Citations: View citations in EconPapers (3)

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