A Note on illegal waste disposal, corruption and enforcement

We focus on the role played by waste policy and enforcement in determining waste related corruption. We develop a simple model in which an economic agent chooses the level of illegal disposal of its waste. The polluting agent can be detected by the local police authority. In the event of discovery of illegal waste disposal, the local administration may decide to report the agent's illegal activity (implying that the agent itself will have to pay a unit fine on such activity), or to protect the polluting agent in exchange for a bribe. The official in charge is herself subject to enforcement from the central government. By varying the exogenous enforcement and waste tax levels, we derive several interesting trade-offs among the goals of reducing corruption, financing legal disposal costs and illegal dumping. For example, high charges for legal disposal lead to increased illegal disposal and corruption. Also, somewhat surprisingly, a stricter enforcement on the regulated agent may lead to an increased likelihood of corruption and to higher rates of illegal disposal.