Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5068460 | European Journal of Political Economy | 2008 | 20 Pages |
Abstract
This paper seeks to explain the implications of corruption and political instability for firm investment in abatement technology. In our theoretical set-up, a firm has an incentive to under-invest in abatement technology in order to gain a political advantage. The prediction that emerges is that greater corruptibility increases the level of abatement technology investment. This occurs because the strategic incentive to under-invest in pollution control technology declines when policymakers become more corruptible. Moreover, the model predicts that political instability raises abatement technology investment. Using steel-sector panel data from 41 countries for the years 1992-1998, we find empirical support for these predictions.
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Authors
Per G. Fredriksson, Jim R. Wollscheid,