Economic Growth, Health, and the Choice of Polluting Technologies: The Role of Bureaucratic Corruption

Dimitrios Varvarigos ()

No 13/22, Discussion Papers in Economics from Division of Economics, School of Business, University of Leicester

Abstract: I model an economy where the adverse health effects of pollution impede labour productivity and capital accumulation is the source of economic growth. Pollution is generated by firms that choose whether to employ a dirty technology and pay an environmental tax, or employ a clean technology and incur the cost of its adoption. The task of inspecting the environmental impact of each firm’s production technology is delegated to bureaucrats who are corruptible since they receive bribes in order to mislead authorities on the firms’ actual technology choice. The model can generate multiple steady state equilibria. In this context, the multiplicity of equilibria is associated with indeterminacy, due to the self-fulfilling nature of corruption incentives and the relevant implications for pollution, productivity and economic growth.

Keywords: Corruption; Economic Growth; Health; Pollution; Productivity (search for similar items in EconPapers)
JEL-codes: D73 O44 Q58 (search for similar items in EconPapers)
Date: 2013-09
New Economics Papers: this item is included in nep-dge, nep-env, nep-hea and nep-res
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