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Measuring regulatory errors from environmental policy uncertainty

Author

Listed:
  • Ana Espinola-Arredondo

    (Washington State University)

  • Felix Munoz-Garcia

    (Washington State University)

  • Dolores Garrido

    (Union College)

Abstract

We examine an environmental policy which may be revisited by a new administration. We allow for pollution to be persistent over time and for uncertainty in next period's environmental policy. When pollution is non-persistent, we show that regulatory uncertainty is inconsequential for output, pollution, or emission fees. However, when pollution is persistent, we find that a more likely reelection of a stringent administration has the unintended (positive) consequence of reducing current pollution. We also measure the inefficiencies stemming from ignoring pollution persistence and from policy uncertainty, identifying in which contexts they are severe or negligible.

Suggested Citation

  • Ana Espinola-Arredondo & Felix Munoz-Garcia & Dolores Garrido, 2023. "Measuring regulatory errors from environmental policy uncertainty," Journal of Regulatory Economics, Springer, vol. 64(1), pages 48-65, December.
    • Handle: RePEc:kap:regeco:v:64:y:2023:i:1:d:10.1007_s11149-023-09464-z
    DOI: 10.1007/s11149-023-09464-z
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    More about this item

    Keywords

    Environmental policy; Pollution persistence; Policy uncertainty; Inefficiencies;
    All these keywords.

    JEL classification:

    • 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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