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Government failure, rent-seeking, and capture: the design of climate change policy

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  • Dieter Helm
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    Abstract

    Climate change has been described as one of the biggest market failures. Less attention has been paid to the government failures associated with interventions, and the implications for the design of climate change policy. This paper sets out the main types of government failure, and shows how the processes of rent-seeking and capture help to explain both why the choice of targets and instruments has been so inefficient, and also why the resulting costs of carbon mitigation are likely to be considerably higher than the estimates provided by the Stern Review and other recent studies. Two examples are given: emissions trading and renewables policy. A number of generic conclusions are drawn about how taking account of government failures can help to improve policy design, and limit the impact of the climate change 'pork barrel' which existing policies have created. Copyright 2010, Oxford University Press.

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    File URL: http://hdl.handle.net/10.1093/oxrep/grq006
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    Bibliographic Info

    Article provided by Oxford University Press in its journal Oxford Review of Economic Policy.

    Volume (Year): 26 (2010)
    Issue (Month): 2 (Summer)
    Pages: 182-196

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    Handle: RePEc:oup:oxford:v:26:y:2010:i:2:p:182-196

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    Web page: http://oxrep.oupjournals.org/

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    Cited by:
    1. Hallegatte, Stephane & Heal, Geoffrey & Fay, Marianne & Treguer, David, 2011. "From growth to green growth -- a framework," Policy Research Working Paper Series 5872, The World Bank.
    2. Hallegatte, Stephane & Fay, Marianne & Vogt-Schilb, Adrien, 2013. "Green industrial policies : when and how," Policy Research Working Paper Series 6677, The World Bank.
    3. G. Cornelis van Kooten & Tim Bogle & Frans P. de Vries, 2012. "Rent Seeking and the Smoke and Mirrors Game in the Creation of Forest Sector Carbon Credits: An Example from British Columbia," Working Papers, University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group 2012-06, University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group.
    4. Altenburg, Tilman & Engelmeier, Tobias, 2013. "Boosting solar investment with limited subsidies: Rent management and policy learning in India," Energy Policy, Elsevier, vol. 59(C), pages 866-874.
    5. Purkus, Alexandra & Gawel, Erik & Thrän, Daniela, 2012. "Bioenergy governance between market and government failures: A new institutional economics perspective," UFZ Discussion Papers 13/2012, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
    6. Gawel, Erik & Strunz, Sebastian & Lehmann, Paul, 2013. "A public choice view on the climate and energy policy mix in the EU: How do the emissions trading scheme and support for renewable energies interact?," UFZ Discussion Papers 5/2013, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
    7. G. Cornelis van Kooten & Craig Johnston & Zhen Xu, 2012. "Economics of Forest Carbon Sequestration," Working Papers, University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group 2012-04, University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group.

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