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Dynamic analysis of bribery firms’ environmental tax evasion in an emissions trading market

Yoshihiro Hamaguchi ()

Journal of Macroeconomics, 2020, vol. 63, issue C

Abstract: Using an R&D-based growth model with dual regulation, we analyse how environmental policies influence pollution, corruption, a growth rate, and welfare. Considering that polluting firms bribe bureaucrats to evade paying environmental tax, we find that a stricter environmental tax leads to a decrease in growth rate via a decrease in the permit rent as well as an increase in pollution and corruption per firm and results in worsening households’ welfare and in improving the bureaucrats’ welfare. Thus, tax evasion with corruption improves households’ welfare and worsens the bureaucrats’ welfare. Our findings imply that tax evasion under dual regulation improves social welfare.

Keywords: Environmental policy; Policy mix; Tax evasion; Corruption; Economic growth (search for similar items in EconPapers)
JEL-codes: H26 O31 P48 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.jmacro.2019.103169

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