Economic Structure And Motivation Of Illegal Waste Disposal

In developing countries, there are evidences to show that the severe pollution is caused by corruption and bribery. It is because the government can offer the firm an alternative way to treat their waste. The study extends the von Neumann general equilibrium model to discuss the relationship between illegal disposal, corruption, and supervision. We use an economic equilibrium in10table, which is derived by Sraffa, Leontief and von Neumann. We try to deal with the relationship between corruption and pollution. We separate the market in three situations:the regular waste treatment process monopolizes the market of waste treatment, illegal waste treatment process monopolizes the market of waste treatment, and they both share the market.To widen our perspective, we cite a value system and a quantitative system. A closed solution of the model is shown to explore the explicit relation between regular treatment cost, corruption cost, and average social profit. We also focus on the incentive of the firms to select boodle and illegal disposal as the way to treat their waste. The result shows the more the regular treatment cost is, the higher incentive of the firm holders to choose the boodle. The average social profit converges to0if the treatment cost tends to infinite. We finally prove the existence of the equilibrium when the probability by which the supervise citizen detects government’s illegal authorization is a function of the activity intensity of government’s illegal authorization. It explains the situation in which the regular treatment and illegal disposal coexist. This study introduces the economic thought of von Neumann, and extends the von Neumann general equilibrium model to discuss the impact of corruption and supervision on pollution. The modeled economy is disaggregated into four parts, in other words four types of processes are considered—production processes, regular waste treatment process, government, and supervise citizen. The production processes produce commodities and generate waste. The waste is observable and must be treated by either the regular waste treatment process or the government. The regular waste treatment process physically treats the waste and makes it harmless to the environment, while the government "treats" the waste by authorizing the production processes to throw their waste directly into the environment. The authorization is in the dark but may be detected by the supervise citizen. The supervise citizen punishes the officials of the government if they detect the illegal authorization.Meanwhile, as the products of the above mentioned four types of processes, three types of commodities (or services) are taken into account, the normal commodities (or services) produced by the production processes, waste treatment service provided by regular waste treatment process or the government, supervise service from the supervise citizen. In our model, the corruption leads to the illegal authorization of direct throw of waste, which is an alternative method to treat the waste from the linn holders’perspective. The study discusses the incentive and the el ect of buying illegal authorization as the method to treat the waste. The results show that a higher regulatory standard of emission induces firm’s to o(?) er bribery and more ei cient treatment technology deadens the urges to o(?) er bribery. The expected cost of waste treatment decreases the social average profit.