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Clean or dirty energy: evidence of corruption in the renewable energy sector

Gennaioli, Caterina and Tavoni, Massimo (2016) Clean or dirty energy: evidence of corruption in the renewable energy sector. Public Choice, 166 (3). pp. 1-30. ISSN 0048-5829

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Identification Number: 10.1007/s11127-016-0322-y

Abstract

This paper studies the link between public policy and corruption for the case of wind energy. We show that publicly subsidized renewable energy can attract criminal appetites and favor the formation of criminal associations between entrepreneurs and politicians able to influence the licensing process. The insights of a simple model of political influence by interest groups are tested empirically using Italian data for the period 1990-2007. Using a difference in difference approach we quantify the impact of a Green Certificate policy aimed at supporting renewables, and find robust evidence that criminal association activity increased more in windy provinces after the introduction of the generous policy regime. The magnitude of the effect is large: the construction of an average wind park is associated with an increase of criminal association activity of 6% in the treatment compared to the control group. Our findings show that in the presence of poor institutions, even well designed market-based policies can have an adverse impact. The analysis is relevant for countries which are generally characterized by heavy bureacracies, weak institutions and by large renewable potential.

Item Type: Article
Official URL: http://link.springer.com/journal/11127
Additional Information: © 2016 The Authors © CC BY 4.0
Divisions: Grantham Research Institute
Subjects: G Geography. Anthropology. Recreation > GE Environmental Sciences
H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HS Societies secret benevolent etc
H Social Sciences > HV Social pathology. Social and public welfare. Criminology
J Political Science > JN Political institutions (Europe)
JEL classification: D - Microeconomics > D7 - Analysis of Collective Decision-Making > D73 - Bureaucracy; Administrative Processes in Public Organizations; Corruption
H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H23 - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O13 - Agriculture; Natural Resources; Energy; Environment; Other Primary Products
Sets: Research centres and groups > Grantham Research Institute on Climate Change and the Environment
Date Deposited: 27 Jan 2016 14:48
Last Modified: 20 Mar 2019 02:53
Projects: ES/K006576/1, 282846, ES/K006576/1, 282846, ID0ECHAG211, 282846 (LIMITS)
Funders: Economic and Social Research Council, European Community’s Seventh Framework Program, Economic and Social Research Council, Seventh Framework Programme, UK Economic and Social Research Council through the Centre for Climate Change Economics and Policy, European Community’s Seventh Framework Program FP7/2007-2013
URI: http://eprints.lse.ac.uk/id/eprint/65173

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