Abate, bribe or quit
Firms’ decision in the presence of environmental regulation, informality and corruption
Bibliographic Data
| ID | 21691083 |
|---|---|
| Authors | Sarbajit Sengupta (0000-0002-1299-0908, Visva-Bharati University), Amit K Biswas (0000-0002-7756-773X, Visva-Bharati University, corresponding author) |
| Year | 2025 |
| Pages | 1-21 |
| Publication date | 2025-10-06 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Environment and Development Economics (JOURNAL) |
| Journal identifiers | ISSN: 1355-770X • E-ISSN: 1469-4395 |
| Publisher | Cambridge University Press (CUP) (PUBLISHER) |
| DOI | 10.1017/s1355770x25100223 |
| OpenAlex | W4414846964 |
| Language | EN |
| References cited | 29 |
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
Corruption, growth, and the environment
The economics of the informal sector
The impact of environmental regulation, shadow economy, and corruption on environmental quality
The Effectiveness of Environmental Monitoring and Enforcement
The Unofficial Economy and Economic Development
The Reputational Penalties for Environmental Violations
The system of administrative and political corruption
Corruption, income and the environment
Pollution, shadow economy and corruption
Informal Sector Pollution Control
Defining and estimating underground and informal economies
Who takes bribes and how much? Evidence from the China Corruption Conviction Databank
Informal sector
Environmental foe or friend
The Simple Economics of Extortion
Informality and Development
| Citation velocity | historical |
|---|---|
| Highly cited | No |