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Secondary Issues and Party Politics: An Application to Environmental Policy

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Author Info
Anesi, Vincent
De Donder, Philippe

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Abstract

The paper develops a political economy model to assess the interplay between political party formation and an environmental policy dimension viewed as secondary to the redistributive dimension. We define being a secondary issue in terms of the intensity of preferences over this issue rather than in terms of the proportion of voters who care for the environment. We build on Levy (2004) for the political equilibrium concept, defined as the solution to a two stage game where politicians first form parties and where parties then compete by choosing a policy bundle in order to win the elections. We obtain the following results: i) The Pigouvian tax never emerges in an equilibrium; ii) The equilibrium environmental tax is larger when there is a minority of green voters; iii) Stable green parties exist only if there is a minority of green voters and income polarization is large enough relative to the saliency of the environmental issue. We also study the redistributive policies advocated by green parties.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6774.

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Date of creation: Apr 2008
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Handle: RePEc:cpr:ceprdp:6774

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Related research
Keywords: electoral competition; income polarization; party formation; salience; stable green party;

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Find related papers by JEL classification:
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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  2. Levy, Gilat, 2004. "A model of political parties," Journal of Economic Theory, Elsevier, vol. 115(2), pages 250-277, April. [Downloadable!] (restricted)
  3. Heerink, Nico & Mulatu, Abay & Bulte, Erwin, 2001. "Income inequality and the environment: aggregation bias in environmental Kuznets curves," Ecological Economics, Elsevier, vol. 38(3), pages 359-367, September. [Downloadable!] (restricted)
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  7. John A List & Daniel M Sturm, 2006. "How Elections Matter: Theory and Evidence from Environmental Policy," The Quarterly Journal of Economics, MIT Press, vol. 121(4), pages 1249-1281, November. [Downloadable!] (restricted)
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  8. Larry E. Jones & Rodolfo E. Manuelli, 2001. "Endogenous Policy Choice: The Case of Pollution and Growth," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 4(2), pages 369-405, July. [Downloadable!] (restricted)
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  9. 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. [Downloadable!] (restricted)
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  12. Cremer, Helmuth & De Donder, Philippe & Gahvari, Firouz, 2008. "Political competition within and between parties: An application to environmental policy," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 532-547, April. [Downloadable!] (restricted)
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  13. 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. [Downloadable!] (restricted)
  14. Oates, Wallace E. & Portney, Paul R., 2003. "The political economy of environmental policy," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 1, chapter 8, pages 325-354 Elsevier. [Downloadable!] (restricted)
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  15. Anesi, Vincent & De Donder, Philippe, 2007. "Party Formation and Racism," CEPR Discussion Papers 6281, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  16. Anesi, Vincent, 2006. "Earmarked taxation and political competition," Journal of Public Economics, Elsevier, vol. 90(4-5), pages 679-701, May. [Downloadable!] (restricted)
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  19. McAusland, Carol, 2003. "Voting for pollution policy: the importance of income inequality and openness to trade," Journal of International Economics, Elsevier, vol. 61(2), pages 425-451, December. [Downloadable!] (restricted)
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