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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]
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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 

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