Redealing the Cards: How the Presence of an Eco-Industry Modifies the Political Economy of Environmental Policies
AbstractAn incumbent government maximizes its chances of being reelected. Its objective function encompasses both social welfare and political contributions. Its only instrument is a pollution tax. In an open-economy context, we introduce an eco-industry in addition to lobbies of polluting firms and environmentalists. Not only does the eco-industry lobby add a new political contribution toward a higher environmental tax, it 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. It could also be in the interest of a vertical industrial pressure group to lobby toward more stringent environmental policy. In general, the impact of lobbying activities on the politically optimal tax is ambiguous as pressure groups push in different directions.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2007.25.
Date of creation: Feb 2007
Date of revision:
Eco-Industry; Environmental Taxation; Lobbies; Political Economy;
Find related papers by JEL classification:
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-04-09 (All new papers)
- NEP-ENE-2007-04-09 (Energy Economics)
- NEP-ENV-2007-04-09 (Environmental Economics)
- NEP-PBE-2007-04-09 (Public Economics)
- NEP-POL-2007-04-09 (Positive Political Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Maia David & Bernard Sinclair-Desgagné, 2004.
"Environmental Regulation and the Eco-industry,"
CIRANO Working Papers
- Maia David & Bernard Sinclair-Desgagné, 2005. "Environmental regulation and the eco-industry," Working Papers hal-00243019, HAL.
- Bernard Sinclair-Desgagné & Maia David, 2005. "Environmental Regulationand the Eco-Industry," Working Papers 2005.56, Fondazione Eni Enrico Mattei.
- Maia David & Bernard Sinclair-Desgagné, 2004. "Environmental Regulation and the Eco-Industry," Working Papers 2004/06, INRA, Economie Publique.
- Gene M. Grossman & Elhanan Helpman, 1992.
"Protection For Sale,"
NBER Working Papers
4149, National Bureau of Economic Research, Inc.
- Grossman, Gene & Helpman, Elhanan, 1993. "Protection for Sale," CEPR Discussion Papers 827, C.E.P.R. Discussion Papers.
- Grossman, G.M. & Helpman, E., 1992. "Protection for Sale," Papers 162, Princeton, Woodrow Wilson School - Public and International Affairs.
- Grossman, G.M. & Helpman, E., 1992. "Protection for Sale," Papers 21-92, Tel Aviv.
- Portney, Paul & Oates, Wallace, 2001.
"The Political Economy of Environmental Policy,"
dp-01-55, Resources For the Future.
- Alain-Désiré Nimubona & Bernard Sinclair-Desgagné, 2005.
"The Pigouvian Tax Rule in the Presence of an Eco-Industry,"
- Alain-Désiré Nimubona & Bernard Sinclair-Desgagné, 2013. "The Pigouvian Tax Rule in the Presence of an Eco-Industry," Economics Bulletin, AccessEcon, vol. 33(1), pages 747-752.
- Bernard Sinclair-Desgagné & Alain-Désiré Nimubona, 2005. "The Pigouvian Tax Rule in the Presence of an Eco-Industry," Working Papers 2005.57, Fondazione Eni Enrico Mattei.
- Alain-Désiré Nimubona & Bernard Sinclair-Desgagné, 2005. "The Pigouvian Tax Rule in the Presence of an Eco-Industry," CIRANO Working Papers 2005s-21, CIRANO.
- Toke Aidt, 2004.
"The rise of environmentalism, pollution taxes and intra-industry trade,"
Economics of Governance,
Springer, vol. 6(1), pages 1-12, January.
- Aidt, T.S., 2000. "The Rise of Environmentalism, Pollution Taxes and Intra-Industry Trade," Cambridge Working Papers in Economics 0017, Faculty of Economics, University of Cambridge.
- Eberhard Feess & Gerd Muehlheusser, 2002. "Strategic Environmental Policy, Clean Technologies and the Learning Curve," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 23(2), pages 149-166, October.
- 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.
- Dixit, Avinash & Grossman, Gene M. & Helpman, Elhanan, 1997.
"Common Agency and Coordination: General Theory and Application to Government Policy Making,"
3450061, Harvard University Department of Economics.
- Dixit, Avinash & Grossman, Gene M & Helpman, Elhanan, 1997. "Common Agency and Coordination: General Theory and Application to Government Policy Making," Journal of Political Economy, University of Chicago Press, vol. 105(4), pages 752-69, August.
- Buchanan, James M & Tullock, Gordon, 1975. "Polluters' Profits and Political Response: Direct Controls Versus Taxes," American Economic Review, American Economic Association, vol. 65(1), pages 139-47, March.
- Hamilton, Stephen F. & Requate, Till, 2004.
"Vertical structure and strategic environmental trade policy,"
Journal of Environmental Economics and Management,
Elsevier, vol. 47(2), pages 260-269, March.
- Stephan F. Hamilton & Till Requate, 2001. "Vertical Structure and Strategic Environmental Trade Policy," CESifo Working Paper Series 594, CESifo Group Munich.
- Aidt, Toke S., 1998. "Political internalization of economic externalities and environmental policy," Journal of Public Economics, Elsevier, vol. 69(1), pages 1-16, July.
- Michaelowa, Axel, 2004. "The German Wind Energy Lobby : How to successfully promote costly technological change," HWWA Discussion Papers 296, Hamburg Institute of International Economics (HWWA).
- Joan Canton, 2007. "Environmental Taxation and International Eco-Industries," Working Papers 2007.26, Fondazione Eni Enrico Mattei.
- Greaker, Mads, 2006. "Spillovers in the development of new pollution abatement technology: A new look at the Porter-hypothesis," Journal of Environmental Economics and Management, Elsevier, vol. 52(1), pages 411-420, July.
- Avinash Dixit, 1996. "Special-Interest Lobbying and Endogenous Commodity Taxation," Eastern Economic Journal, Eastern Economic Association, vol. 22(4), pages 375-388, Fall.
- 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.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (barbara racah).
If references are entirely missing, you can add them using this form.