A Political Economy Model of the Ganges Pollution Cleanup Problem
AbstractWe study pollution cleanup in the Ganges in Varanasi, India. Voters elect politicians and
elected politicians decide how much pollution to clean up. Between time periods, there is an
election. Politicians are sincere or insincere. The marginal cost of public funds ߞ measures how
efficiently elected politicians transform tax receipts into pollution cleanup. Voters have identical
per period utility functions. We ascertain the equilibrium outcome and per period voter welfare.
Second, we show that an increase in ߞ reduces the equilibrium pollution cleanup and voter
welfare. Third, an insincere politician to can delay the revelation of his insincerity. We show that
a critical value of ߞ ,ߞ ,∗exists such that the insincere incumbent separates and loses the election if
and only if ߞߞ ∗and that he pools and is re-elected otherwise. Finally, we note that an increase
in ߞ can raise voter welfare when politicians are more likely to be insincere.