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Green licenses and environmental corruption: a random matching model

Author

Listed:
  • Angelo Antoci

    (University of Sassari, Italy)

  • Simone Borghesi

    (University of Siena, Italy)

  • Gianluca Iannucci

    (University of Florence, Italy)

Abstract

This paper studies environmental corruption via a random matching evolutionary game between a population of firms and a population of bureaucrats who have to decide whether to release a “green” license to the firms. A firm obtains the license if the bureaucrat checks that it complies with environmental regulations, otherwise it is sanctioned. The model assumes that there are two types of bureaucrats (honest and dishonest), two types of firms (compliant and non-compliant), and two possible crimes (corruption and extortion). Corruption occurs when a dishonest bureaucrat accepts a bribe from a non-compliant firm, while extortion occurs when a dishonest bureaucrat claims a bribe from a compliant firm. When there is no dominance of strategies, we show that there exist two bistable regimes, in which two attractive stationary states exist, and two regimes with an internal stable equilibrium, corresponding to the mixed strategy Nash equilibrium of the one-shot static game, surrounded by closed trajectories. From comparative statics analysis performed on the latter two dynamic regimes, it emerges that policy instruments may help the Public Administration reduce both corruption and extortion, although increasing sanctions and detection probability do not always get the desired results.

Suggested Citation

  • Angelo Antoci & Simone Borghesi & Gianluca Iannucci, 2016. "Green licenses and environmental corruption: a random matching model," SEEDS Working Papers 1116, SEEDS, Sustainability Environmental Economics and Dynamics Studies, revised Nov 2016.
  • Handle: RePEc:srt:wpaper:1016
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    References listed on IDEAS

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    More about this item

    Keywords

    Bureaucratic corruption; Evolutionary games; Environmental regulations; Economics of crime;

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects

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