Corruption, Pollution, and the Kuznets Environment Curve

This paper examines the implications of corruption and rent-seeking behavior by the government for the relationship between pollution and growth. Cases of both cooperative and non-cooperative interaction between the government and the private firm are studied. It is shown that corruption is not likely to preclude the existence of an inverted-U-shaped-Kuznets environmental curve under both these cases. However, for any level of per capita income the pollution levels corresponding to corrupt behavior are always above the socially optimal level. Further, the turning point of the Kuznets curve takes place at income and pollution levels above those corresponding to the social optimum.