Hostname: page-component-cd9895bd7-gxg78 Total loading time: 0 Render date: 2024-12-27T08:14:15.263Z Has data issue: false hasContentIssue false
  • English
  • Français

Corruption, environmental regulation and market entry

Published online by Cambridge University Press:  30 August 2016

Amit K. Biswas  and
Marcel Thum
Amit K. Biswas
Affiliation:
Visva Bharati University, India. E-mail: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

The authors develop a simple analytical framework to study the welfare-maximizing environmental standards when market entry is endogenous and firms can circumvent regulation by bribing corrupt officials. Corruption changes the tradeoff in environmental policy. Corruption leads more polluting firms to enter into the market, which requires tighter environmental regulation. However, corruption also makes trading in some environmental protection for a marginally higher market entry optimal for the government.

Type
Research Article
Information
Environment and Development Economics , Volume 22 , Issue 1 , February 2017 , pp. 66 - 83
Copyright
Copyright © Cambridge University Press 2016 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Aidt, T. (2003), ‘Economic analysis of corruption: a survey’, Economic Journal 113 (November): F632–F652.Google Scholar
Amacher, G.S. and Malik, A.S. (1996), ‘Bargaining in environmental regulation and the ideal regulator’, Journal of Environmental Economics and Management 30(2): 233–253.Google Scholar
Arguedas, C. (2005), ‘Bargaining in environmental regulation revisited’, Journal of Environmental Economics and Management 50(2): 422–433.Google Scholar
Arguedas, C. (2008), ‘To comply or not to comply? Pollution standard setting under costly monitoring and sanctioning’, Environmental and Resource Economics 41(2): 155–168.Google Scholar
Arguedas, C. and Rousseau, S. (2015), ‘Emission standards and monitoring strategies in a hierarchical setting’, Environmental and Resource Economics 60(3): 395–412.Google Scholar
Biswas, A.K., Farzanegan, M.R., and Thum, M. (2012), ‘Pollution, shadow economy and corruption: theory and evidence’, Ecological Economics 75(1): 114–125.Google Scholar
Bliss, C. and Di Tella, R. (1997), ‘Does competition kill corruption?’, Journal of Political Economy 105(5): 1001–1023.Google Scholar
Choi, J.P. and Thum, M. (2004), ‘The economics of repeated extortion’, RAND Journal of Economics 35(2): 203–223.CrossRefGoogle Scholar
Choi, J.P. and Thum, M. (2005), ‘Corruption and the shadow economy’, International Economic Review 46(3): 817–836.CrossRefGoogle Scholar
Cole, M.A. (2007), ‘Corruption, income and the environment: an empirical analysis’, Ecological Economics 62(3–4): 637–647.Google Scholar
Damania, R. (2002), ‘Environmental controls with corrupt bureaucrats’, Environment and Development Economics 7(3): 407–427.Google Scholar
Damania, R., Fredriksson, P.G., and List, J.A. (2003), ‘Trade liberalization, corruption, and environmental policy formation: theory and evidence’, Journal of Environmental Economics and Management 46(3): 490–512.Google Scholar
Emerson, P.M. (2006), ‘Corruption, competition and democracy’, Journal of Development Economics 81(1): 193–212.CrossRefGoogle Scholar
Fisman, R. and Svensson, J. (2007), ‘Are corruption and taxation really harmful to growth? Firm level evidence’, Journal of Development Economics 83(1): 63–75.Google Scholar
Harford, J.D. (1978), ‘Firm behavior under imperfect enforceable pollution standards and taxes’, Journal of Environmental Economics and Management 5(1): 26–43.Google Scholar
Hubbard, T.A. (1998), ‘An empirical examination of moral hazard in the vehicle inspection market’, RAND Journal of Economics 29(2): 406–426.Google Scholar
Ivanova, K. (2011), ‘Corruption and air pollution in Europe’, Oxford Economic Papers 63(1): 49–70.CrossRefGoogle ScholarPubMed
Katsoulacos, Y. and Xepapadeas, A. (1995), ‘Environmental policy under oligopoly with endogenous market structure’, Scandinavian Journal of Economics 97(3): 411–420.CrossRefGoogle Scholar
Keeler, A. (1991), ‘Noncompliant firms in TDP markets’, Journal of Environmental Economics and Management 21(2): 180–189.Google Scholar
Koyuncu, C. and Yilmaz, R. (2009), ‘The impact of corruption on deforestation: a cross-country evidence’, Journal of Developing Areas 42(2): 213–222.Google Scholar
Lee, S.H. (1999), ‘Optimal taxation for pollution oligopolists with endogenous market structure’, Journal of Regulatory Economics 15(3): 293–308.Google Scholar
Malik, A. (1990), ‘Markets for pollution control when firms are noncompliant’, Journal of Environmental Economics and Management 18(2): 97–106.Google Scholar
Malik, A. (2002), ‘Further results on permit markets with market power and cheating’, Journal of Environmental Economics and Management 44(3): 371–390.CrossRefGoogle Scholar
Oliva, P. (2015), ‘Environmental regulations and corruption: automobile emissions in Mexico City’, Journal of Political Economy 123(3): 686–724.Google Scholar
Olken, B.A. and Barron, P. (2009), ‘The simple economics of extortion: evidence from trucking in Aceh’, Journal of Political Economy 117(3): 417–452.Google Scholar
Polinsky, A.M. and Shavell, S. (2001), ‘Corruption and optimal law enforcement’, Journal of Public Economics 81(1): 1–24.Google Scholar
Shleifer, A. and Vishny, R.W. (1993), ‘Corruption’, Quarterly Journal of Economics 108(3): 599–617.Google Scholar
Stathopoulou, E. and Varvarigos, D. (2013), ‘Corruption, entry and pollution’, Working Paper No. 13/21, University of Leicester.Google Scholar
Stranlund, J.K. and Dhanda, K.K. (1999), ‘Endogenous monitoring and enforcement of a transferable emission permit system’, Journal of Environmental Economics and Management 38(3): 267–282.Google Scholar
Svensson, J. (2003), ‘Who must pay bribes and how much? Evidence from a cross section of firms’, Quarterly Journal of Economics 118(1): 207–230.Google Scholar
Van Egteren, H. and Weber, M. (1996), ‘Marketable permits, market power, and cheating’, Journal of Environmental Economics and Management 30(2): 161–173.Google Scholar
Welsch, H. (2004), ‘Corruption, growth, and the environment: a cross-country analysis’, Environment and Development Economics 9(5): 663–693.CrossRefGoogle Scholar
World Development (2006), ‘Corruption and development: analysis and measurement (special section)’, World Development 34(2): 324–404.Google Scholar