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Political Competition, Rent Seeking and the Choice of Environmental Policy Instruments

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  • R. Damania

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Abstract

This paper investigates the impact of political lobbying on the choice of environmental policy instruments. It is argued that the prevalence of pollution emission standards over more efficient policy instruments may result from rent seeking behaviour. The model further predicts that when an emission standard is used to control pollution, rival political parties have an incentive to set the same standard. There is therefore a convergence of policies. Moreover, it is shown that emission taxes are more likely to be supported and proposed by political parties which represent environmental interest groups. This feature appears to accord with the observed support for environmental taxes by ‘Green’ parties in Europe, Australia, New Zealand and elsewhere. Copyright Kluwer Academic Publishers 1999

Suggested Citation

  • 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.
  • Handle: RePEc:kap:enreec:v:13:y:1999:i:4:p:415-433
    DOI: 10.1023/A:1008299920714
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    References listed on IDEAS

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    1. Buchanan, James M & Tullock, Gordon, 1975. "Polluters' Profits and Political Response: Direct Controls Versus Taxes," American Economic Review, American Economic Association, vol. 65(1), pages 139-147, March.
    2. L. Wade, 1988. "Review," Public Choice, Springer, vol. 58(1), pages 99-100, July.
    3. Hillman, Arye L & Ursprung, Heinrich W, 1988. "Domestic Politics, Foreign Interests, and International Trade Policy," American Economic Review, American Economic Association, vol. 78(4), pages 719-745, September.
    4. Conrad Klaus, 1993. "Taxes and Subsidies for Pollution-Intensive Industries as Trade Policy," Journal of Environmental Economics and Management, Elsevier, vol. 25(2), pages 121-135, September.
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    Cited by:

    1. Alesina, Alberto & Passarelli, Francesco, 2014. "Regulation versus taxation," Journal of Public Economics, Elsevier, vol. 110(C), pages 147-156.
    2. Georges A. Tanguay & Paul Lanoie & Jérôme Moreau, 2001. "Environmental Policy, Public Interest and Political Market," Cahiers de recherche 01-01, HEC Montréal, Institut d'économie appliquée.
    3. Louis Jaeck & Gilbert Bougi, 2010. "Dynamics of Environmental Regulation and Voters’ Biased Beliefs: A Political Economy Approach," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 38(4), pages 399-409, December.
    4. Paul Lanoie & Jérôme Moreau & Georges A. Tanguay, 2001. "Environmental Policy, Public Interest and Political Market," CIRANO Working Papers 2001s-37, CIRANO.
    5. 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.
    6. Jessica Coria & Magnus Hennlock, 2012. "Taxes, permits and costly policy response to technological change," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 14(1), pages 35-60, January.
    7. Bouwe Dijkstra, 2004. "Political Competition, Rent Seeking and the Choice of Environmental Policy Instruments: Comment," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 29(1), pages 39-56, September.

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