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Redealing the cards: How an eco-industry modifies the political economy of environmental taxes

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  • Canton, Joan

Abstract

This article presents a combined economic-political model of environmental taxation setting. The model introduces a third lobby group - the lobby of an eco-industry - in addition to the traditional lobbies of polluting firms and environmentalists. Pressure groups interact to influence the environmental tax chosen by a regulator maximizing its chances of being reelected. The eco-industry lobby adds a new political contribution toward a higher environmental tax. The imperfectly competitive structure of the eco-industry also modifies the incentives of the usual lobbies. When the foreign environmental policy is constant, environmentalists can be in favor of a decrease in the local tax in order to reduce foreign pollution. We also discuss the formation of alliances between the eco-industry and one of the other lobbies and their potential impact. In general, the impact of lobbying activities on the politically optimal tax is ambiguous and depends on the relative concentration of each pressure group.

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Bibliographic Info

Article provided by Elsevier in its journal Resource and Energy Economics.

Volume (Year): 30 (2008)
Issue (Month): 3 (August)
Pages: 295-315

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Handle: RePEc:eee:resene:v:30:y:2008:i:3:p:295-315

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Web page: http://www.elsevier.com/locate/inca/505569

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Citations

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Cited by:
  1. Sophie Bernard, 2011. "Remanufacturing," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00638178, HAL.
  2. Joan Canton, 2009. "Environmentalists' Behaviour and Environmental Policies policies," Working Papers 2009.76, Fondazione Eni Enrico Mattei.
  3. Francesco Vona & Francesco Nicolli, 2013. "Energy market liberalisation and renewable energy policies in OECD countries," Sciences Po publications 2013-10, Sciences Po.
  4. Masakazu Maezuru, 2012. "International Environmental Policies and Environmental Lobbying in the Presence of Eco-industry," ERSA conference papers ersa12p700, European Regional Science Association.
  5. Sonia Schwartz & Hubert Stahn, 2010. "Competitive Permit Markets and Vertical Structures: The Relevance of Imperfect Competitive Eco-Industries," Working Papers halshs-00501831, HAL.
  6. Menegaki, Angeliki N. & Ozturk, Ilhan, 2013. "Growth and energy nexus in Europe revisited: Evidence from a fixed effects political economy model," Energy Policy, Elsevier, vol. 61(C), pages 881-887.
  7. Keisuke Kawata & Yasunori Ouchida, 2013. "Offshoring, trade and environmental policies: Effects of transboundary pollution," IDEC DP2 Series 3-8, Hiroshima University, Graduate School for International Development and Cooperation (IDEC).

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