Environmental and Resource Economics

, Volume 38, Issue 4, pp 475–496

Corruption, illegal trade and compliance with the Montreal Protocol

Article

DOI: 10.1007/s10640-007-9088-5

Cite this article as:
Ivanova, K. Environ Resource Econ (2007) 38: 475. doi:10.1007/s10640-007-9088-5

Abstract

This paper studies the effects of corruption, rule of law and tariffs on illegal trade in chlorofluorocarbons (CFCs) controlled by the Montreal Protocol. Since data on illegal trade is not available, it is not possible to test any theoretical conclusions about smuggling. The paper, however, attempts to circumvent the problem by developing a model of illegal trade in CFCs that derives predictions about the effects of corruption, rule of law and tariffs on both legal and illegal imports of CFCs. Then the theoretical predictions concerning legal imports are tested using panel data on CFC consumption. Using the estimates of legal imports, inferences about illegal trade are made. The basic findings indicate that knowledge about the degree of rule of law, corruption and the level of tariffs is needed for the correct interpretation of the data on environmental performance reported to international monitoring agencies.

Keywords

Corruption Environment Illegal Law Montreal Protocol Tariff Trade 

Abbreviations

CFC

Chlorofluorocarbon

ODS

Ozone-depleting substance

UNEP

United Nations Environment Program

ODP

Ozone-depleting potential

ICRG

International Country Risk Guide

PRS

Political Risk Services

CEIT

Countries with economies in transition

ML

Maximum Likelihood

OLS

Odinary Least Squares

LR

Likelihood Ratio

EU

European Union

TRAINS

Trade Analysis and Information System

UNCTAD

United Nations Conference on Trade and Development

GDP

Gross domestic product

EIA

Environmental Investigation Agency

REML

Restricted Maximum Likelihood

Copyright information

© Springer Science+Business Media, Inc. 2007

Authors and Affiliations

  1. 1.Department of Political ScienceVanderbilt UniversityNashvilleUSA

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