Reference : Is Abatement Effective in the Presence of Corruption? A Theoretical Exploration
E-prints/Working papers : First made available on ORBilu
Business & economic sciences : Social economics
http://hdl.handle.net/10993/19423
Is Abatement Effective in the Presence of Corruption? A Theoretical Exploration
English
[en] Is Abatement Effective in the Presence of Corruption? A Theoretical Exploration
Litina, Anastasia mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA) >]
Sartzetakis, Eftichis mailto [University of Macedonia > Department of Economics]
Lapatina, Athanasios mailto [University of Ioannina > Department of Economics]
Nov-2014
No
[en] Corruption ; Environment ; Technology
[en] The paper introduces an additional channel via which corruption may adversely affect environmental quality. It is argued that, in the presence of corruption, politicians may allocate a large fraction of public funds to environmental projects aiming not at improving environmental quality, but rather at increasing their ability to extract rents. This type of behavior has a direct and an indirect effect on environmental quality. First, due to extensive rent-seeking, the effectiveness of environmental projects is disproportional to the amount of public funds allocated to them. Second, citizens who observe the poor outcome of environmental projects, increase tax evasion thus reducing public funds. A vicious circle of extensive tax evasion and rent seeking activities emerges, that has a detrimental effect on environmental quality. Anecdotal evidence from a number of countries that experience high levels of corruption, shows little or no improvements in environmental quality despite the implementation of environmental projects. In line with our theoretical findings, this ineffectiveness of the environmental policy is present even when the technology involved is advanced.
http://hdl.handle.net/10993/19423

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