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The political economy of investment: The case of pollution control technology

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  • Fredriksson, Per G.
  • Wollscheid, Jim R.

Abstract

This paper seeks to explain the implications of corruption and political instability for firm investment in abatement technology. In our theoretical set-up, a firm has an incentive to under-invest in abatement technology in order to gain a political advantage. The prediction that emerges is that greater corruptibility increases the level of abatement technology investment. This occurs because the strategic incentive to under-invest in pollution control technology declines when policymakers become more corruptible. Moreover, the model predicts that political instability raises abatement technology investment. Using steel-sector panel data from 41 countries for the years 1992-1998, we find empirical support for these predictions.

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Bibliographic Info

Article provided by Elsevier in its journal European Journal of Political Economy.

Volume (Year): 24 (2008)
Issue (Month): 1 (March)
Pages: 53-72

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Handle: RePEc:eee:poleco:v:24:y:2008:i:1:p:53-72

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Web page: http://www.elsevier.com/locate/inca/505544

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Citations

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Cited by:
  1. Aidt, Toke S., 2010. "Green taxes: Refunding rules and lobbying," Journal of Environmental Economics and Management, Elsevier, vol. 60(1), pages 31-43, July.
  2. Erdogdu, Erkan, 2011. "The political economy of electricity market liberalization: a cross-country approach," MPRA Paper 33724, University Library of Munich, Germany.
  3. Lovely, Mary & Popp, David, 2011. "Trade, technology, and the environment: Does access to technology promote environmental regulation?," Journal of Environmental Economics and Management, Elsevier, vol. 61(1), pages 16-35, January.
  4. David Popp & Richard G. Newell & Adam B. Jaffe, 2009. "Energy, the Environment, and Technological Change," NBER Working Papers 14832, National Bureau of Economic Research, Inc.
  5. Caporale, Guglielmo Maria & Rault, Christophe & Sova, Robert & Sova, Anamaria, 2010. "Pollution Abatement and Control Expenditure in Romania: A Multilevel Analysis," IZA Discussion Papers 5041, Institute for the Study of Labor (IZA).
  6. Tideman, T. Nicolaus & Plassmann, Florenz, 2010. "Pricing externalities," European Journal of Political Economy, Elsevier, vol. 26(2), pages 176-184, June.

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