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Regulatory failure and the polluter pays principle: why regulatory impact assessment dominates the polluter pays principle

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  • Dieter Schmidtchen

    (Saarland University)

  • Jenny Helstroffer

    (Université de Lorraine, Université de Strasbourg, AgroParisTech, CNRS, INRAE, BETA)

  • Christian Koboldt

    (DotEcon)

Abstract

This paper shows possible inconsistencies in environmental law, in which regulatory impact assessment (RIA) and the polluter pays principle (PPP) coexist. While these norms can be compatible, we show that there are a number of realistic settings in which the PPP does not reach efficiency and systematically leads to regulatory failure. These systematic errors are due to the ex-ante restriction of possible actors, in combination with possible opportunistic behavior, market power issues, the existence of multiple optima and to the neglect of second-best problems in the PPP. We show that RIA, encompasses the polluter pays option and avoids these flaws.

Suggested Citation

  • Dieter Schmidtchen & Jenny Helstroffer & Christian Koboldt, 2021. "Regulatory failure and the polluter pays principle: why regulatory impact assessment dominates the polluter pays principle," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 23(1), pages 109-144, January.
    • Handle: RePEc:spr:envpol:v:23:y:2021:i:1:d:10.1007_s10018-020-00285-4
    DOI: 10.1007/s10018-020-00285-4
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    More about this item

    Keywords

    Polluter pays principle; External costs; Regulatory impact assessment;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • K2 - Law and Economics - - Regulation and Business Law

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