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The Political Economy of Refunded Emissions Payment Programs

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  • Fredriksson, Per G.

    ()
    (Department of Economics, Southern Methodist University)

  • Sterner, Thomas

    ()
    (Department of Economics, School of Economics and Commercial Law, Göteborg University)

Abstract

Lobbying by pollution firms is commonly viewed as having a negative impact on the stringency of environmental policy. We ask whether lobbying instead can bring about stricter environmental policy, and how imperfect property rights affect the policy outcome. We study the effects on the equilibrium pollution tax of refunding all tax payments to the polluting firms. Relatively clean firms may be induced to lobby for a higher pollution levy. However, this incentive declines when the property rights over the accumulated funds are insecure.

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File URL: http://hdl.handle.net/2077/2770
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Bibliographic Info

Paper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 147.

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Length: 9 pages
Date of creation: 07 Jan 2004
Date of revision:
Publication status: Published in Economic Letters, 2005, pages 113-119.
Handle: RePEc:hhs:gunwpe:0147

Contact details of provider:
Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/
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Keywords: Political economy; Lobbying; Environmental Policy; Gaseous emisions; Nox;

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References

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  1. Gene M. Grossman & Elhanan Helpman, 1992. "Protection For Sale," NBER Working Papers 4149, National Bureau of Economic Research, Inc.
  2. Marsiliani, Laura & Renstrom, Thomas I, 2000. "Time Inconsistency in Environmental Policy: Tax Earmarking as a Commitment Solution," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 110(462), pages C123-38, March.
  3. Robert T. Deacon & Henning Bohn, 2000. "Ownership Risk, Investment, and the Use of Natural Resources," American Economic Review, American Economic Association, American Economic Association, vol. 90(3), pages 526-549, June.
  4. Brett, Craig & Keen, Michael, 2000. "Political uncertainty and the earmarking of environmental taxes," Journal of Public Economics, Elsevier, Elsevier, vol. 75(3), pages 315-340, March.
  5. Damania, R., 2001. "When the Weak Win: The Role of Investment in Environmental Lobbying," Journal of Environmental Economics and Management, Elsevier, vol. 42(1), pages 1-22, July.
  6. Fischer, Carolyn, 2011. "Market power and output-based refunding of environmental policy revenues," Resource and Energy Economics, Elsevier, Elsevier, vol. 33(1), pages 212-230, January.
  7. Robert T. Deacon, 1994. "Deforestation and the Rule of Law in a Cross-Section of Countries," Land Economics, University of Wisconsin Press, vol. 70(4), pages 414-430.
  8. Fredriksson, Per G. & Svensson, Jakob, 2003. "Political instability, corruption and policy formation: the case of environmental policy," Journal of Public Economics, Elsevier, Elsevier, vol. 87(7-8), pages 1383-1405, August.
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Citations

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Cited by:
  1. Susumu Cato, 2010. "Emission Taxes and Optimal Refunding Schemes with Endogenous Market Structure," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 46(3), pages 275-280, July.
  2. Coria, Jessica & Mohlin, Kristina, 2013. "On Refunding of Emission Taxes and Technology Diffusion," Working Papers in Economics, University of Gothenburg, Department of Economics 573, University of Gothenburg, Department of Economics.
  3. Yuanguang Yu, 2012. "An Optimal Ad Valorem Tax/Subsidy with an Output-Based Refunded Emission Payment for Permits Auction in an Oligopoly Market," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 52(2), pages 235-248, June.
  4. Cathrine Hagem & Bjart Holtsmark & Thomas Sterner, 2012. "Mechanism design for refunding emissions payment," Discussion Papers, Research Department of Statistics Norway 705, Research Department of Statistics Norway.
  5. Muller, Adrian & Sterner, Thomas, 2009. "Output and Abatement Effects of Allocation Readjustment in Permit Trade," Working Papers in Economics, University of Gothenburg, Department of Economics 413, University of Gothenburg, Department of Economics.
  6. Aidt, Toke S., 2010. "Green taxes: Refunding rules and lobbying," Journal of Environmental Economics and Management, Elsevier, vol. 60(1), pages 31-43, July.
  7. Pierre-André Jouvet & Fabien Prieur, 2006. "Permis de pollution et contraintes politiques dans un modèle à générations imbriquées," EconomiX Working Papers 2006-21, University of Paris West - Nanterre la Défense, EconomiX.
  8. Alberto F. Alesina & Francesco Passarelli, 2010. "Regulation Versus Taxation," NBER Working Papers 16413, National Bureau of Economic Research, Inc.
  9. Last Name, First Name, 2008. "Innovation and Diffusion of Environmental Technology: Industrial NOx Abatement in Sweden under Refunded Emission Payments," Discussion Papers, Resources For the Future dp-08-02, Resources For the Future.

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