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Corruption-proof minimum regulation for `Zero emission': Status incentives - Bane or boon?

Author

Listed:
  • Preksha Jain
  • Rupayan Pal

    (Indira Gandhi Institute of Development Research)

Abstract

This paper explores the possibility of designing environmental regulation that ensures `zero emission', by promoting non-polluting `green' technology adoption by firms, without creating new rooms for corruption. It demonstrates that it is feasible to implement the `target equilibrium', in which there is `no emission and no corruption', through environmental regulation alone. It also characterizes the `target equilibrium' implementing `minimum environmental regulation', which corresponds to the least possible subsidy expenditure and the lowest possible tax burden on firms, in alternative scenarios. More interestingly, it shows that, in the presence of corruption possibilities, introduction of reputation enhancing non-monetary incentives for `green' technology adoption makes it harder to implement the target equilibrium'. It underscores that usefulness of status incentives to nudge firms' behaviour for environmental protection is rather limited. These are robust results.

Suggested Citation

  • Preksha Jain & Rupayan Pal, 2023. "Corruption-proof minimum regulation for `Zero emission': Status incentives - Bane or boon?," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2023-009, Indira Gandhi Institute of Development Research, Mumbai, India.
    • Handle: RePEc:ind:igiwpp:2023-009
    as

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    File URL: http://www.igidr.ac.in/pdf/publication/WP-2023-009.pdf
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    More about this item

    Keywords

    Zero emission; Corruption; Minimum environmental regulation; Non-monetary status incentive; Brown tax; Green technology subsidy;
    All these keywords.

    JEL classification:

    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption

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