Corruption and environmental policy: An alternative perspective
AbstractWe construct an overlapping generations model comprising of two distinct groups of agents, citizens and politicians. Each agent lives through two periods; childhood and adulthood. She makes choices only as an adult, based on her utility that depends on her own con- sumption and the human capital and environmental quality endowed to her o¤spring. Citizens decide upon the proportion of their income that declare to the tax authorities, balancing between their own con- sumption and their o¤springs?s well being. Politicians on the other hand can peculate a part of the tax revenue allocated to education and environmental protection with the rates of peculation for each ac- tivity exogenously given. Politicians decide upon the allocation of the tax revenue between the two activities balancing a similar trade-o¤ to that of citizens. In this context, two self-ful?lling stable equilib- ria can emerge, one with high tax evasion and high allocation to the more rent-seeking activity and one with low tax evasion and low al- location to the more rent-seeking activity. This outcome accords well with existing empirical evidence and outlines that environmental poli- cies may fail in corrupt countries if they are meant to increase rent seeking instead of protecting the environment.
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Bibliographic InfoPaper provided by Department of Economics, University of Macedonia in its series Discussion Paper Series with number 2011_08.
Date of creation: Jun 2011
Date of revision: Jun 2011
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Other versions of this item:
- Athanasios Lapatinas & Anastasia Litina & Eftichios S. Sartzetakis, 2011. "Corruption and Environmental Policy: An Alternative Perspective," Working Papers 2011.23, Fondazione Eni Enrico Mattei.
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
- H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
- Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
- Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-05-30 (All new papers)
- NEP-DGE-2011-05-30 (Dynamic General Equilibrium)
- NEP-ENV-2011-05-30 (Environmental Economics)
- NEP-POL-2011-05-30 (Positive Political Economics)
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