IDEAS home Printed from https://ideas.repec.org/p/soz/wpaper/0301.html
   My bibliography  Save this paper

Lobbying against Environmental Regulation vs. Lobbying for Loopholes

Author

Listed:
  • Andreas Polk
  • Armin Schmutzler

    (Socioeconomic Institute, University of Zurich)

Abstract

We analyze the determinants of environmental policy when two firms engage in two types of lobbying against a restriction on allowed pollution: General lobbying increases the total amount of allowed pollution, which is beneficial for both firms. Private lobbying increases the individual pollution standard of the lobbying firm, but has a negative or zero effect on the allowed emissions of the competitor. We determine the lobbying equilibrium and discuss the resulting emission level. In many cases, a higher effectiveness of private lobbying is detrimental for firms and beneficial for environmental quality, as it induces firms to turn towards excessive amounts of relatively unproductive private lobbying.

Suggested Citation

  • Andreas Polk & Armin Schmutzler, 2003. "Lobbying against Environmental Regulation vs. Lobbying for Loopholes," SOI - Working Papers 0301, Socioeconomic Institute - University of Zurich.
    • Handle: RePEc:soz:wpaper:0301
    as

    Download full text from publisher

    File URL: https://www.econ.uzh.ch/apps/workingpapers/wp/wp0301.pdf
    File Function: First version, 2003
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Buehler, Stefan & Schmutzler, Armin & Benz, Men-Andri, 2004. "Infrastructure quality in deregulated industries: is there an underinvestment problem?," International Journal of Industrial Organization, Elsevier, vol. 22(2), pages 253-267, February.
    2. Magee,Stephen P. & Brock,William A. & Young,Leslie, 1989. "Black Hole Tariffs and Endogenous Policy Theory," Cambridge Books, Cambridge University Press, number 9780521377003, January.
    3. Polk, Andreas & Schmutzler, Armin, 2005. "Lobbying against environmental regulation vs. lobbying for loopholes," European Journal of Political Economy, Elsevier, vol. 21(4), pages 915-931, December.
    4. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
    5. Andreas Polk, 2002. "Multilateral Agreement On Investments (MAI) - A Critical Assessment From an Industrial Economics Point of View," SOI - Working Papers 0201, Socioeconomic Institute - University of Zurich, revised Feb 2002.
    6. Rodrik, Dani, 1986. "Tariffs, subsidies, and welfare with endogenous policy," Journal of International Economics, Elsevier, vol. 21(3-4), pages 285-299, November.
    7. Bennedsen, Morten & Feldmann, Sven E., 2006. "Informational lobbying and political contributions," Journal of Public Economics, Elsevier, vol. 90(4-5), pages 631-656, May.
    8. Schmutzler, Armin & Bühler, Stefan & Borek, Thomas, 2003. "Weddings with Uncertain Prospects - Mergers under Asymmetric Information," CEPR Discussion Papers 3839, C.E.P.R. Discussion Papers.
    9. Yves Schneider & Peter Zweifel, 2004. "How Much Internalization of Nuclear Risk Through Liability Insurance?," Journal of Risk and Uncertainty, Springer, vol. 29(3), pages 219-240, December.
    10. Bouwe R. Dijkstra, 1999. "The Political Economy of Environmental Policy," Books, Edward Elgar Publishing, number 1636.
    11. Hahn, Robert W, 1990. "The Political Economy of Environmental Regulation: Towards a Unifying Framework," Public Choice, Springer, vol. 65(1), pages 21-47, April.
    12. Rainer Winkelmann, 2002. "Subjektive Daten in der empirischen Wirtschaftsforschung: Probleme und Perspektiven," SOI - Working Papers 0207, Socioeconomic Institute - University of Zurich, revised Jul 2002.
    13. Thomas Borek & Stefan Buehler & Armin Schmutzler, 2002. "Weddings with Uncertain Prospects � Mergers under Asymmetric Information," SOI - Working Papers 0213, Socioeconomic Institute - University of Zurich, revised Feb 2004.
    14. Toke Aidt, 1997. "Cooperative lobbying and endogenous trade policy," Public Choice, Springer, vol. 93(3), pages 455-475, December.
    15. Zava Aydemir & Stefan Buehler, 2002. "Estimating Vertical Foreclosure in U.S. Gasoline Supply," SOI - Working Papers 0212, Socioeconomic Institute - University of Zurich.
    16. R. Damania, 1999. "Political Competition, Rent Seeking and the Choice of Environmental Policy Instruments," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 13(4), pages 415-433, June.
    17. 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.
    18. Athey, Susan & Schmutzler, Armin, 2001. "Investment and Market Dominance," RAND Journal of Economics, The RAND Corporation, vol. 32(1), pages 1-26, Spring.
    19. Milgrom, Paul & Roberts, John, 1990. "Rationalizability, Learning, and Equilibrium in Games with Strategic Complementarities," Econometrica, Econometric Society, vol. 58(6), pages 1255-1277, November.
    20. Aidt, Toke S., 1998. "Political internalization of economic externalities and environmental policy," Journal of Public Economics, Elsevier, vol. 69(1), pages 1-16, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jean-Yves Heurtebise, 2017. "Sustainability and Ecological Civilization in the Age of Anthropocene: An Epistemological Analysis of the Psychosocial and “Culturalist” Interpretations of Global Environmental Risks," Sustainability, MDPI, vol. 9(8), pages 1-17, August.
    2. Andrew, Jane & Cortese, Corinne, 2013. "Free market environmentalism and the neoliberal project: The case of the Climate Disclosure Standards Board," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 24(6), pages 397-409.
    3. Beard, Rodney & Mallawaarachchi, Thilak & Salerno, Gillian, 2007. "Environmental lobbying with imperfect monitoring of environmental quality," MPRA Paper 5346, University Library of Munich, Germany, revised Oct 2007.
    4. Polk, Andreas & Schmutzler, Armin, 2005. "Lobbying against environmental regulation vs. lobbying for loopholes," European Journal of Political Economy, Elsevier, vol. 21(4), pages 915-931, December.
    5. Kawahara, Shinya, 2011. "Electoral competition with environmental policy as a second best transfer," Resource and Energy Economics, Elsevier, vol. 33(3), pages 477-495, September.
    6. Daniel Cardona & Jenny De Freitas & Antoni Rubí-Barceló, 2021. "Environmental policy contests: command and control versus taxes," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(3), pages 654-684, June.
    7. Jonathan Boston & Frieder Lempp, 2011. "Climate change," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 24(8), pages 1000-1021, October.
    8. Rohling, Moritz & Ohndorf, Markus, 2012. "Prices vs. Quantities with fiscal cushioning," Resource and Energy Economics, Elsevier, vol. 34(2), pages 169-187.
    9. Martin Gregor, 2011. "Corporate lobbying: A review of the recent literature," Working Papers IES 2011/32, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Nov 2011.
    10. Liu, Yongzheng & Zhang, Xiaoge, 2023. "Environmental regulation, political incentives, and mortality in China," European Journal of Political Economy, Elsevier, vol. 78(C).
    11. Daniel Halbheer & Sarah Niggli & Armin Schmutzler, 2006. "What Does it Take to Sell Environmental Policy? An Empirical Analysis of Referendum Data," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 33(4), pages 441-462, April.
    12. Kauder, Björn & Potrafke, Niklas & Ursprung, Heinrich, 2018. "Behavioral determinants of proclaimed support for environment protection policies," European Journal of Political Economy, Elsevier, vol. 54(C), pages 26-41.
    13. Catola, Marco & D'Alessandro, Simone, 2020. "Market competition, lobbying influence and environmental externalities," European Journal of Political Economy, Elsevier, vol. 63(C).
    14. Niels Anger & Christoph Böhringer & Andreas Lange, 2015. "The political economy of energy tax differentiation across industries: theory and empirical evidence," Journal of Regulatory Economics, Springer, vol. 47(1), pages 78-98, February.
    15. Richard Cothren & Ravi Radhakrishnan, 2018. "Productivity growth and welfare in a model of allocative inefficiency," Journal of Economics, Springer, vol. 123(3), pages 277-298, April.
    16. Aidt, Toke S., 2010. "Green taxes: Refunding rules and lobbying," Journal of Environmental Economics and Management, Elsevier, vol. 60(1), pages 31-43, July.
    17. Isabelle Cadoret & Emma Galli & Fabio Padovano, 2018. "How do governments actually use environmental taxes?," Economics Working Paper from Condorcet Center for political Economy at CREM-CNRS 2018-02-ccr, Condorcet Center for political Economy.
    18. Plutshack, Victoria & Sengupta, Subhanjan & Sahay, Arunaditya & Viñuales, Jorge E., 2019. "New and renewable energy social enterprises accessing government support: Findings from India," Energy Policy, Elsevier, vol. 132(C), pages 367-378.
    19. Ravi Radhakrishnan, 2022. "Public expenditure allocation, lobbying, and growth," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 24(4), pages 756-780, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Michael Breuer, 2003. "Multiple Losses, Ex-Ante Moral Hazard, and the Non-Optimality of the Standard Insurance Contract," SOI - Working Papers 0302, Socioeconomic Institute - University of Zurich, revised Apr 2003.
    2. Hans Gersbach & Armin Schmutzler, 2004. "Globalization and General Worker Training," SOI - Working Papers 0403, Socioeconomic Institute - University of Zurich.
    3. Buehler Stefan & Schmutzler Armin, 2005. "Asymmetric Vertical Integration," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 5(1), pages 1-27, January.
    4. Michael Breuer, 2004. "Deductible or Co-Insurance: Which is the Better Insurance Contract under Adverse Selection?," SOI - Working Papers 0401, Socioeconomic Institute - University of Zurich, revised Oct 2004.
    5. Stefan Buehler & Justus Haucap, 2004. "Mobile Number Portability," Journal of Industry, Competition and Trade, Springer, vol. 4(3), pages 223-238, September.
    6. Harry Telser & Karolin Becker & Peter Zweifel, 2004. "Validity and Reliability of Willingness-to-Pay Estimates: Evidence from Two Overlapping Discrete-Choice Experiments," SOI - Working Papers 0412, Socioeconomic Institute - University of Zurich, revised Mar 2008.
    7. Buehler, Stefan & Haucap, Justus, 2006. "Strategic outsourcing revisited," Journal of Economic Behavior & Organization, Elsevier, vol. 61(3), pages 325-338, November.
    8. Stefan Buehler & Armin Schmutzler, 2005. "On The Role of Access Charges Under Network Competition," SOI - Working Papers 0501, Socioeconomic Institute - University of Zurich.
    9. Michael Breuer, 2004. "Optimal Insurance Contracts without the Non-Negativity Constraint on Indemnities Revisited," SOI - Working Papers 0406, Socioeconomic Institute - University of Zurich.
    10. Harry Telser & Peter Zweifel, 2003. "Validity of Discrete-Choice Experiments - Evidence for Health Risk Reduction," SOI - Working Papers 0313, Socioeconomic Institute - University of Zurich, revised Feb 2005.
    11. Peter Zweifel & Harry Telser & Stephan Vaterlaus, 2005. "Consumer Resistance Against Regulation: The Case of Health Care," SOI - Working Papers 0505, Socioeconomic Institute - University of Zurich.
    12. Wallace E. Oates & Paul R. Portney & Wallace E. Oates & Paul R. Portney, 2004. "The Political Economy of Environmental Policy," Chapters, in: Environmental Policy and Fiscal Federalism, chapter 1, pages 3-30, Edward Elgar Publishing.
    13. Stefan Boes & Rainer Winkelmann, 2006. "Ordered response models," AStA Advances in Statistical Analysis, Springer;German Statistical Society, vol. 90(1), pages 167-181, March.
    14. Stavins, Robert, 2004. "Introduction to the Political Economy of Environmental Regulations," RFF Working Paper Series dp-04-12, Resources for the Future.
    15. Simon Loertscher & Yves Schneider, 2005. "Switching Costs, Firm Size, and Market Structure," SOI - Working Papers 0508, Socioeconomic Institute - University of Zurich.
    16. Paul Lanoie & Jérôme Moreau & Georges A. Tanguay, 2001. "Environmental Policy, Public Interest and Political Market," CIRANO Working Papers 2001s-37, CIRANO.
    17. Fredriksson, Per G., 1998. "Environmental policy choice: Pollution abatement subsidies," Resource and Energy Economics, Elsevier, vol. 20(1), pages 51-63, March.
    18. Isabelle Cadoret & Fabio Padovano, 2018. "Derterminants and consequences of the stringency of environmental policies: an empirical test," Economics Working Paper from Condorcet Center for political Economy at CREM-CNRS 2018-04-ccr, Condorcet Center for political Economy.
    19. Kawahara, Shinya, 2011. "Electoral competition with environmental policy as a second best transfer," Resource and Energy Economics, Elsevier, vol. 33(3), pages 477-495, September.
    20. Per Fredriksson, 2001. "How Pollution Taxes may Increase Pollution and Reduce Net Revenues," Public Choice, Springer, vol. 107(1), pages 65-85, April.

    More about this item

    Keywords

    environmental regulation; pollution standards; interest groups; lobbying; policy making;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:soz:wpaper:0301. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Severin Oswald (email available below). General contact details of provider: https://edirc.repec.org/data/seizhch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.