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Pollution for Sale: Firms’ Characteristics and Lobbying Outcome

Author

Listed:
  • Dapeng Cai

    (Nanzan University)

  • Jie Li

    (Jinan University)

Abstract

We consider how the attributes of individual firms may influence the lobbying outcome concerning the setting of the stringency of a costly environmental regulation. We show that when there is a strong asymmetry between firms, a clean firm may lobby to strengthen the regulation, while its dirty rival lobbies to weaken the regulation. Moreover, the lobbying process is asymmetric in that the clean firm finds it more difficult to reach its objectives: although only a sufficiently large clean firm can succeed in strengthening regulation, a relatively small dirty firm can successfully bend a regulation toward its own interest.

Suggested Citation

  • Dapeng Cai & Jie Li, 2020. "Pollution for Sale: Firms’ Characteristics and Lobbying Outcome," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 77(3), pages 539-564, November.
    • Handle: RePEc:kap:enreec:v:77:y:2020:i:3:d:10.1007_s10640-020-00507-z
    DOI: 10.1007/s10640-020-00507-z
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    1. Hirose, Kosuke & Ishihara, Akifumi & Matsumura, Toshihiro, 2021. "Tax versus Regulations: Robustness to Polluter Lobbying Against Near-Zero Emission Targets," MPRA Paper 108380, University Library of Munich, Germany.

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    More about this item

    Keywords

    Common agency; Corporate political activity (CPA); Emission standard; Lobbying; Pollution tax; Raising rivals’ costs;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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