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Forest Conservation – Too Much or Too Little? A Political Economy Model

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  • Essi Eerola

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Abstract

This paper studies the formation offorest policy when the government isinfluenced by an environmental lobbyand an industrial lobby representing anon-competitive wood processing industry.Government decides on forestconservation by way of restricting timberharvesting. Lobbying is modelledas a common agency game with differencesin the efficiency of lobbying. Acomparison of the political equilibriashows that an exporting forestindustry faces a stricter conservationrequirement than a forest industrywhose production is destined for domesticmarkets. If the industrial lobbyis more efficient than the environmentallobby, conservation is insufficientfrom the social point of view. However,conservation may be insufficienteven if the environmental lobby is moreefficient in lobbying than theindustrial lobby. This is because thelobbying effort of the environmentallobby also benefits consumers thatremain politically passive. Copyright Kluwer Academic Publishers 2004

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File URL: http://hdl.handle.net/10.1023/B:EARE.0000018520.19216.2a
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Bibliographic Info

Article provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

Volume (Year): 27 (2004)
Issue (Month): 4 (April)
Pages: 391-407

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Handle: RePEc:kap:enreec:v:27:y:2004:i:4:p:391-407

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Web page: http://www.springerlink.com/link.asp?id=100263

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Keywords: amenity valuation; common agency; forest policy; lobbying; market power;

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References

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  1. Grossman, G.M. & Helpman, E., 1992. "Protection for Sale," Papers 21-92, Tel Aviv.
  2. Aidt, Toke S., 1998. "Political internalization of economic externalities and environmental policy," Journal of Public Economics, Elsevier, vol. 69(1), pages 1-16, July.
  3. Giovanni Maggi & Pinelopi Koujianou Goldberg, 1999. "Protection for Sale: An Empirical Investigation," American Economic Review, American Economic Association, vol. 89(5), pages 1135-1155, December.
  4. Barnett, A H, 1980. "The Pigouvian Tax Rule under Monopoly," American Economic Review, American Economic Association, vol. 70(5), pages 1037-41, December.
  5. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
  6. Bernheim, B Douglas & Whinston, Michael D, 1986. "Menu Auctions, Resource Allocation, and Economic Influence," The Quarterly Journal of Economics, MIT Press, vol. 101(1), pages 1-31, February.
  7. Gene Grossman & Elhanan Helpman, 1994. "Electoral Competition and Special Interest Politics," NBER Working Papers 4877, National Bureau of Economic Research, Inc.
  8. Fredriksson, Per G., 1997. "The Political Economy of Pollution Taxes in a Small Open Economy," Journal of Environmental Economics and Management, Elsevier, vol. 33(1), pages 44-58, May.
  9. Devashish Mitra, 1999. "Endogenous Lobby Formation and Endogenous Protection: A Long-Run Model of Trade Policy Determination," American Economic Review, American Economic Association, vol. 89(5), pages 1116-1134, December.
  10. Schleich, Joachim, 1999. "Environmental quality with endogenous domestic and trade policies1," European Journal of Political Economy, Elsevier, vol. 15(1), pages 53-71, March.
  11. Faure-Grimaud, Antoine & Laffont, Jean-Jacques & Martimort, David, 1999. "The endogenous transaction costs of delegated auditing," European Economic Review, Elsevier, vol. 43(4-6), pages 1039-1048, April.
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Cited by:
  1. Gaoussou Diarra & Sébastien Marchand, 2011. "Does Pervasive Corruption Matter For Firm's Demand for Good Governance in Developing Countries?," Working Papers halshs-00588191, HAL.
  2. Philippe Delacote, 2011. "How concessions’ size may influence systemic corruption in forest harvesting: A theoretical assessment," Working Papers - Cahiers du LEF 2011-05, Laboratoire d'Economie Forestiere, AgroParisTech-INRA.

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