Abate, bribe or quit

Firms’ decision in the presence of environmental regulation, informality and corruption

Datos Bibliográficos

ID21691083
AutoresSarbajit Sengupta (0000-0002-1299-0908, Visva-Bharati University), Amit K Biswas (0000-0002-7756-773X, Visva-Bharati University, autor de correspondencia)
Año2025
Páginas1-21
Fecha de publicación2025-10-06
Peer ReviewedSí
Open AccessSí
TipoARTICLE
RevistaEnvironment and Development Economics (JOURNAL)
Identificadores de la revistaISSN: 1355-770X • E-ISSN: 1469-4395
EditorialCambridge University Press (CUP) (PUBLISHER)
DOI10.1017/s1355770x25100223
OpenAlexW4414846964
IdiomaEN
Referencias citadas29

Public authorities often enforce pollution abatement through monitoring and penalties. However, monitoring is costly and only a small percentage of firms are monitored. Inspectors may be corrupt and permit evasion for a bribe. For firms in developing countries, it is expensive to enter formally and install costly abatement technologies, which are accessible only to formal firms. This paper studies a framework where firms, depending on abatement cost, the probability of inspection, the likelihood of a corrupt inspector and the bribe, choose whether to organize formally or informally and whether to abate before inspection. Firms that do not abate beforehand are liable to either pay a penalty and abate or close down post-inspection. Greater monitoring and lower abatement costs encourage firms to move towards formal organization, while excessively high penalties may discourage entry

Cost–benefit analysis · Developing country · Language change · Tax Evasion · Corruption and Economic Development · Fiscal Policy and Economic Growth · Taxation and Compliance Studies