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Lobbying against environmental regulation vs. lobbying for loopholes

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  • Polk, Andreas
  • Schmutzler, Armin

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.
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  • 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.
    • Handle: RePEc:eee:poleco:v:21:y:2005:i:4:p:915-931
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    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. Isabelle Cadoret & Emma Galli & Fabio Padovano, 2020. "How do governments actually use environmental taxes?," Applied Economics, Taylor & Francis Journals, vol. 52(48), pages 5263-5281, October.
    15. 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.
    16. 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.
    17. Aidt, Toke S., 2010. "Green taxes: Refunding rules and lobbying," Journal of Environmental Economics and Management, Elsevier, vol. 60(1), pages 31-43, July.
    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.

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    More about this item

    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

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