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Environmental policy in majoritarian systems

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  • Fredriksson, Per G.
  • Matschke, Xenia
  • Minier, Jenny

Abstract

This paper sheds new light on the determination of environmental tax policies in majoritarian federal electoral systems, such as the U.S., and derives implications for the environmental federalism debate on whether the national or local government should have authority over environmental taxes. In the absence of majority bias, the socially preferred policy would be federal district-level taxation which accounts both for cross-boundary pollution and differences in industry concentration across districts. In majoritarian systems, however, where the legislature consists of geographically distinct electoral districts, the majority party (at the national or state level) favors home districts; depending on the location of polluting industries and the associated damages, the majority party may therefore impose sub-optimally high or low pollution taxes due to a majority bias. Majority bias can influence the social-welfare ranking of alternative environmental tax policies. In some cases, majority bias may make decentralized or federal uniform taxation the preferred solution.

Suggested Citation

  • Fredriksson, Per G. & Matschke, Xenia & Minier, Jenny, 2010. "Environmental policy in majoritarian systems," Journal of Environmental Economics and Management, Elsevier, vol. 59(2), pages 177-191, March.
  • Handle: RePEc:eee:jeeman:v:59:y:2010:i:2:p:177-191
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    Cited by:

    1. Toke S. Aidt & Jayasri Dutta, 2017. "Fiscal Federalism and Electoral Accountability," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 19(1), pages 38-58, February.
    2. Anabel Zárate-Marco & Jaime Vallés-Giménez, 2015. "Environmental tax and productivity in a decentralized context: new findings on the Porter hypothesis," European Journal of Law and Economics, Springer, vol. 40(2), pages 313-339, October.
    3. Friehe, Tim & Langlais, Eric, 2015. "On the political economy of public safety investments," International Review of Law and Economics, Elsevier, vol. 41(C), pages 7-16.
    4. Per G. Fredriksson & Xenia Matschke, 2016. "Trade Liberalization and Environmental Taxation in Federal Systems," Scandinavian Journal of Economics, Wiley Blackwell, vol. 118(1), pages 150-167, January.
    5. Athanasios Lapatinas & Anastasia Litina & Eftichios Sophocles Sartzetakis, 2014. "Is Abatement Effective in the Presence of Corruption? A Theoretical Exploration," CREA Discussion Paper Series 14-29, Center for Research in Economic Analysis, University of Luxembourg.
    6. Fredriksson, Per G. & Wollscheid, Jim R., 2014. "Environmental decentralization and political centralization," Ecological Economics, Elsevier, vol. 107(C), pages 402-410.
    7. Alesina, Alberto & Passarelli, Francesco, 2014. "Regulation versus taxation," Journal of Public Economics, Elsevier, vol. 110(C), pages 147-156.
    8. Divya Datt, 2016. "Inter-governmental political relations in a federation and illegal mining of natural resources," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 18(4), pages 557-576, October.
    9. Strand, Jon, 2013. "Political economy aspects of fuel subsidies : a conceptual framework," Policy Research Working Paper Series 6392, The World Bank.
    10. Sjöberg, Eric, 2016. "An empirical study of federal law versus local environmental enforcement," Journal of Environmental Economics and Management, Elsevier, vol. 76(C), pages 14-31.

    More about this item

    Keywords

    Institutions Environmental policy Environmental federalism Geography Majority bias Political economy;

    JEL classification:

    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • 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
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • R50 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - General

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