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Environmental policy contests: command and control versus taxes

Author

Listed:
  • Daniel Cardona

    (University of the Balearic Islands)

  • Jenny De Freitas

    (University of the Balearic Islands)

  • Antoni Rubí-Barceló

    (University of the Balearic Islands)

Abstract

This study compares the performance of two types of environmental policy instruments (command and control and taxes on emissions) when (1) the regulator’s policy choice is sensitive to the pressure of two lobbies (environmentalist and industry) and (2) lobbies can strategically set the policy proposal they will lobby for. Due to the extra fiscal burden entailed by taxes, we find that lobbyists have more incentives to moderate their policy proposals under command and control. We show how this triggers a series of differences between these two regulatory tools in terms of expected emissions, lobbyists’ utilities, or aggregate welfare.

Suggested Citation

  • Daniel Cardona & Jenny De Freitas & Antoni Rubí-Barceló, 2021. "Environmental policy contests: command and control versus taxes," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(3), pages 654-684, June.
    • Handle: RePEc:kap:itaxpf:v:28:y:2021:i:3:d:10.1007_s10797-020-09631-4
    DOI: 10.1007/s10797-020-09631-4
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    Cited by:

    1. Donnelly, David & Fricaudet, Marie & Ameli, Nadia, 2023. "“Accelerating institutional funding of low-carbon investment: The potential for an investment emissions intensity tax”," Ecological Economics, Elsevier, vol. 207(C).
    2. Daniel Cardona & Jenny De Freitas & Antoni Rubí‐Barceló, 2022. "Lobbying policy makers: Share versus lottery contests," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 24(4), pages 709-732, August.

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    More about this item

    Keywords

    Environmental regulation; Taxes; Command and control; Lobbying; Contests;
    All these keywords.

    JEL classification:

    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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