Dynamic analysis of bribery firms’ environmental tax evasion in an emissions trading market |
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Institution: | 1. Faculty of Management, Department of Management, Osaka Seikei University, 3-10-62, Aikawa, Higashiyodogawa-ku, Osaka, 533-0007, Japan;2. Graduate School of Economics, Osaka University, 1–7, Machikaneyama, Toyonaka, Osaka, 560-0034, Japan;1. Research Institute of Economics and Management, Southwestern University of Finance and Economics;2. Institute of Urban Development, School of Economics, Nanjing Audit University;3. Institute of Economics, Academia Sinica;1. Research Department, Federal Reserve Bank of Atlanta, 1000 Peachtree St. NE, Atlanta, GA 30309, U.S.A;2. Hanken School of Economics, P.O. Box 479, Helsinki 00101, Finland;1. University of Manchester, United Kingdom;2. Nanjing University, China;1. University of Oregon, 435 PLC, kincaid street, eugene, OR 97405, United States;2. Ohio State University, Eugene Oregon 97408, USA;1. Nanyang Technological University, Singapore;2. Southwestern University of Finance and Economics, China;3. University of International Business and Economics, China |
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Abstract: | Using an R&D-based growth model with dual regulation, we analyse how environmental policies influence pollution, corruption, a growth rate, and welfare. Considering that polluting firms bribe bureaucrats to evade paying environmental tax, we find that a stricter environmental tax leads to a decrease in growth rate via a decrease in the permit rent as well as an increase in pollution and corruption per firm and results in worsening households’ welfare and in improving the bureaucrats’ welfare. Thus, tax evasion with corruption improves households’ welfare and worsens the bureaucrats’ welfare. Our findings imply that tax evasion under dual regulation improves social welfare. |
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