Corruption, entry and pollution

Stathopoulou, E. ORCID: 0000-0001-6543-3534 and Varvarigos, D., 2013. Corruption, entry and pollution. Leicester: University of Leicester.


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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.

Item Type: Working paper
Description: University of Leicester Department of Economics: working paper no. 13/21
Creators: Stathopoulou, E. and Varvarigos, D.
Publisher: University of Leicester
Place of Publication: Leicester
Date: September 2013
Divisions: Schools > Nottingham Business School
Record created by: Jonathan Gallacher
Date Added: 30 Jan 2017 11:02
Last Modified: 09 Jun 2017 14:12

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