Urs Steiner Brandt () (Department of Environmental and Business Economics, University of Southern Denmark) Gert Tinggaard Svendsen () (Department of Political Science, University of Aarhus)
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Based on the political support function model by Hillman (1982), we consider the choice of policy instruments in environmental regulation. More specifically, we extend the Hillman model so that it can incorporate the connection between the relative strength of lobby groups, the chosen level of regulation and the choice of instrument to facilitate the achievement of this level. We apply this model to explain the shift from auction to grandfathered emission trading in the EU. When explaining this shift in policy, we focus on climate change policy and the three main interest groups, namely industry, consumers and environ-mentalists. From a pure economic point of view, taxation or auctions are clearly preferable to grandfathering. However, from our political economy model, the opposite conclusion might emerge, suggesting the counter-intuitive result that grandfathering, compared to taxation and auction, might give a stronger pres-sure to increase the emission target level.
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Paper provided by University of Southern Denmark, Department of Environmental and Business Economics in its series Working Papers with number
51/03.
Find related papers by JEL classification: Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy H2 - Public Economics - - Taxation, Subsidies, and Revenue H4 - Public Economics - - Publicly Provided Goods
References listed on IDEAS 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.:
Urs Steiner Brandt & Gert Tinggaard Svendsen, 2001.
"Hot air in Kyoto, cold air in The Hague,"
Working Papers
22/01, University of Southern Denmark, Department of Environmental and Business Economics.
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