EconPapers    
Economics at your fingertips  
 

Environmental tax evasion as a determinant of the Porter and pollution haven hypotheses in a corrupt political system

Yoshihiro Hamaguchi ()

Economic Analysis and Policy, 2023, vol. 79, issue C, 610-633

Abstract: The Porter hypothesis is not very statistically significant, especially in developing countries. This is likely because it overlooks environmental-policy-related bribes, and reducing the regulatory cost burden through bribes can encourage innovation. Moreover, the more competitive are the international markets, the more likely is it for firms to bribe officials in making export decisions. This study identifies a theoretical mechanism for this hypothesis by analyzing the effects of trade environmental policies and bribes associated with tax evasion on pollution, growth, and productivity in an R&D-based growth model considering exporting firms that engage in environmental tax evasion. The analysis yields a weak Porter hypothesis wherein an increase in environmental tax for exporting firms leads to economic growth and pollution reduction. Then, the greasing-the-wheel-of-trade and sanding-the-wheel-of-trade hypotheses are compatible. The different results of trade and environmental policies’ effects on each developing country’s green innovation are likely due to the political institutions’ maturity.

Keywords: Trade liberalization; Growth effect; Entry and exit; Pollution havens hypothesis; Heterogenous firm; Sustainable development (search for similar items in EconPapers)
JEL-codes: F18 F64 H26 O30 Q56 (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0313592623001546
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:79:y:2023:i:c:p:610-633

DOI: 10.1016/j.eap.2023.06.032

Access Statistics for this article

Economic Analysis and Policy is currently edited by Clevo Wilson

More articles in Economic Analysis and Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2024-12-28
Handle: RePEc:eee:ecanpo:v:79:y:2023:i:c:p:610-633