This paper deals with the interaction between polluting firms, tax inspectors and politicians in a corrupted context. We construct a theoretical game model with incomplete information to discuss the effects of such interaction on environmental policy. In this respect, we believe that the State may pursue environmental protection by employing two alternative strategies: on the one hand, the State can, through greater incentive for the tax inspector, increase the monitoring level that reduces the evasion and thus increase tax revenues (incentive channel); on the other hand, the State can, through greater environmental expenses, increase the compliance of the polluting firm which means lower evasion and, thus greater tax revenues (compliance channel). Clearly, more environmental expenses mean, ceteris paribus, less public resources for the tax inspector's incentive, and vice versa. In this context, we demonstrate that, for a country with a high (low) level of incentives, the incentive (compliance) channel is more efficient than the compliance (incentive) channel.

Corruption, evasion and environmental policy: a game theory approach / Cerqueti, Roy; Coppier, Raffaella. - In: IMA JOURNAL OF MANAGEMENT MATHEMATICS. - ISSN 1471-6798. - 27(2):(2016), pp. 235-253. [10.1093/imaman/dpu019]

Corruption, evasion and environmental policy: a game theory approach

CERQUETI, ROY;COPPIER, RAFFAELLA
2016

Abstract

This paper deals with the interaction between polluting firms, tax inspectors and politicians in a corrupted context. We construct a theoretical game model with incomplete information to discuss the effects of such interaction on environmental policy. In this respect, we believe that the State may pursue environmental protection by employing two alternative strategies: on the one hand, the State can, through greater incentive for the tax inspector, increase the monitoring level that reduces the evasion and thus increase tax revenues (incentive channel); on the other hand, the State can, through greater environmental expenses, increase the compliance of the polluting firm which means lower evasion and, thus greater tax revenues (compliance channel). Clearly, more environmental expenses mean, ceteris paribus, less public resources for the tax inspector's incentive, and vice versa. In this context, we demonstrate that, for a country with a high (low) level of incentives, the incentive (compliance) channel is more efficient than the compliance (incentive) channel.
2016
Corruption; evasion; environmental policy
01 Pubblicazione su rivista::01a Articolo in rivista
Corruption, evasion and environmental policy: a game theory approach / Cerqueti, Roy; Coppier, Raffaella. - In: IMA JOURNAL OF MANAGEMENT MATHEMATICS. - ISSN 1471-6798. - 27(2):(2016), pp. 235-253. [10.1093/imaman/dpu019]
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11573/1364502
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