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Transaction Costs and Environmental Policy: An Assessment Framework and Literature Review

Author

Listed:
  • Krutilla, Kerry
  • Krause, Rachel

Abstract

This article develops a framework for environmental policy analysis based on an encompassing assessment of transaction costs. This approach emphasizes the ex ante costs of establishing environmental entitlements, and the ex post costs of administrating, monitoring, and enforcing them. The framework is used to organize a literature review which addresses policy design and instrument choice, as well as optimal environmental policy-making and benefit-cost analysis. The review also considers the empirical literature on transaction costs associated with environmental policy-making, and current practices to record some categories of transaction costs in regulatory impact assessments. The article concludes with a discussion of the implications for environmental policy analysis.

Suggested Citation

  • Krutilla, Kerry & Krause, Rachel, 2011. "Transaction Costs and Environmental Policy: An Assessment Framework and Literature Review," International Review of Environmental and Resource Economics, now publishers, vol. 4(3–4), pages 261-354, April.
  • Handle: RePEc:now:jirere:101.00000035
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    File URL: http://dx.doi.org/10.1561/101.00000035
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    Citations

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    Cited by:

    1. Eliška Vejchodská & Lenka Slavíková & Vítězslav Malý, 2016. "Evaluating the Regulatory Burden: Pollutant Release and Transfer Reporting Costs," Prague Economic Papers, University of Economics, Prague, vol. 2016(6), pages 671-685.
    2. Rouhi-Rad, Mani & Brozovic, Nicholas & Mieno, Taro, 2015. "Implications of Search Frictions for Tradeable Permit Markets," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205798, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    3. Hugh McDonald & Suzi Kerr, 2011. "Trading Efficiency in Water Quality Trading Markets: An Assessment of Trade-Offs," Working Papers 11_15, Motu Economic and Public Policy Research.
    4. McCann, Laura, 2013. "Transaction costs and environmental policy design," Ecological Economics, Elsevier, vol. 88(C), pages 253-262.
    5. Krutilla, Kerry & Alexeev, Alexander, 2014. "The Political Transaction Costs and Uncertainties of Establishing Environmental Rights," Ecological Economics, Elsevier, vol. 107(C), pages 299-309.
    6. Edward B. Barbier, 2013. "Is a global crisis required to prevent climate change? A historical–institutional perspective," Chapters,in: Handbook on Energy and Climate Change, chapter 28, pages 598-614 Edward Elgar Publishing.
    7. repec:wsi:wepxxx:v:04:y:2018:i:01:n:s2382624x17500047 is not listed on IDEAS
    8. Purkus, Alexandra & Gawel, Erik & Thrän, Daniela, 2012. "Bioenergy governance between market and government failures: A new institutional economics perspective," UFZ Discussion Papers 13/2012, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
    9. Eliška Vejchodská & Lenka Slavíková & Vítězslav Malý, . "Evaluating the Regulatory Burden: Pollutant Release and Transfer Reporting Costs," Prague Economic Papers, University of Economics, Prague, vol. 0, pages 1-15.
    10. Alexeev, Alexander & Good, David H. & Krutilla, Kerry, 2016. "Environmental taxation and the double dividend in decentralized jurisdictions," Ecological Economics, Elsevier, vol. 122(C), pages 90-100.
    11. Eory, Vera, 2015. "Evaluating the use of marginal abatement cost curves applied to greenhouse gas abatement in agriculture," Working Papers 199777, Scotland's Rural College (formerly Scottish Agricultural College), Land Economy & Environment Research Group.
    12. Eory, Vera, 2015. "Evaluating the use of marginal abatement cost curves applied to greenhouse gas abatement in agriculture," Working Papers 199777, Scottish Agricultural College, Land Economy Research Group.
    13. repec:wsi:wepxxx:v:03:y:2017:i:02:n:s2382624x16500338 is not listed on IDEAS

    More about this item

    Keywords

    Environmental policy analysis; Transaction costs; Political economy; Policy design; Instrument choice; Benefit-cost analysis;

    JEL classification:

    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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