The political economy of investment: The case of pollution control technology
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.
Year of publication: |
2008
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Authors: | Fredriksson, Per G. ; Wollscheid, Jim R. |
Published in: |
European Journal of Political Economy. - Elsevier, ISSN 0176-2680. - Vol. 24.2008, 1, p. 53-72
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Publisher: |
Elsevier |
Saved in:
Online Resource
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