IDEAS home Printed from https://ideas.repec.org/a/ucp/jlawec/v41y1998i1p37-83.html
   My bibliography  Save this article

The Political Economy of Market-Based Environmental Policy: The U.S. Acid Rain Program

Author

Listed:
  • Joskow, Paul L
  • Schmalensee, Richard

Abstract

The U.S. acid rain program enacted in 1990 gave valuable tradable sulfur dioxide emissions permits--called "allowances"--to electric utilities. We examine the political economy of this allocation. Though no Senate or House votes were ever taken, hypothetical votes suggest that the actual allocation would have beaten plausible alternatives. While rent-seeking behavior is apparent, statistical analysis of differences between actual and benchmark allocations indicates that the legislative process was more complex than simple models suggest. The coalition of states that produced and burned high-sulfur coal both failed to block acid rain legislation in 1990 and received fewer allowances than in plausible benchmark allocations. Some of these states may have received additional allowances to cover 1995-99 emissions by giving up allowances in later years, and some major coal-producing states seem to have focused on benefits for miners and on sustaining demand for high-sulfur coal. Copyright 1998 by the University of Chicago.

Suggested Citation

  • Joskow, Paul L & Schmalensee, Richard, 1998. "The Political Economy of Market-Based Environmental Policy: The U.S. Acid Rain Program," Journal of Law and Economics, University of Chicago Press, vol. 41(1), pages 37-83, April.
  • Handle: RePEc:ucp:jlawec:v:41:y:1998:i:1:p:37-83
    DOI: 10.1086/467384
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1086/467384
    Download Restriction: Access to the online full text or PDF requires a subscription.

    File URL: https://libkey.io/10.1086/467384?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Lisa Kiel & Richard McKenzie, 1983. "The impact of tenure on the flow of federal benefits to SMSA's," Public Choice, Springer, vol. 41(2), pages 285-293, January.
    2. Weingast, Barry R & Marshall, William J, 1988. "The Industrial Organization of Congress; or, Why Legislatures, Like Firms, Are Not Organized as Markets," Journal of Political Economy, University of Chicago Press, vol. 96(1), pages 132-163, February.
    3. Peltzman, Sam, 1990. "How Efficient Is the Voting Market?," Journal of Law and Economics, University of Chicago Press, vol. 33(1), pages 27-63, April.
    4. Stavins Robert N., 1995. "Transaction Costs and Tradeable Permits," Journal of Environmental Economics and Management, Elsevier, vol. 29(2), pages 133-148, September.
    5. Weingast, Barry R & Moran, Mark J, 1983. "Bureaucratic Discretion or Congressional Control? Regulatory Policymaking by the Federal Trade Commission," Journal of Political Economy, University of Chicago Press, vol. 91(5), pages 765-800, October.
    6. Pashigian, B Peter, 1985. "Environmental Regulation: Whose Self-interests Are Being Protected?," Economic Inquiry, Western Economic Association International, vol. 23(4), pages 551-584, October.
    7. Karl Hausker, 1992. "The politics and economics of auction design in the market for sulfur dioxide pollution," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 11(4), pages 553-572.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. P. Hägg, 1997. "Theories on the Economics of Regulation: A Survey of the Literature from a European Perspective," European Journal of Law and Economics, Springer, vol. 4(4), pages 337-370, December.
    2. Eric Helland, 1999. "The Waiver Pork Barrel: Committee Membership And The Approval Time Of Medicaid Waivers," Contemporary Economic Policy, Western Economic Association International, vol. 17(3), pages 401-411, July.
    3. Levitt, Steven D & Poterba, James M, 1999. "Congressional Distributive Politics and State Economic Performance," Public Choice, Springer, vol. 99(1-2), pages 185-216, April.
    4. Keohane, Nathaniel O. & Revesz, Richard L. & Stavins, Robert N., 1997. "The Positive Political Economy of Instrument Choice in Environmental Policy," Discussion Papers 10759, Resources for the Future.
    5. Randall W. Bennett & Christine Loucks, 1996. "Politics And Length Of Time To Bank Failure: 1986–1990," Contemporary Economic Policy, Western Economic Association International, vol. 14(4), pages 29-41, October.
    6. Stavins, Robert, 2004. "Introduction to the Political Economy of Environmental Regulations," RFF Working Paper Series dp-04-12, Resources for the Future.
    7. Joseph P. McGarrity & Daniel Sutter, 2000. "A Test of the Structure of PAC Contracts: An Analysis of House Gun Control Votes in the 1980s," Southern Economic Journal, John Wiley & Sons, vol. 67(1), pages 41-63, July.
    8. John de Figueiredo, 2013. "Committee jurisdiction, congressional behavior and policy outcomes," Public Choice, Springer, vol. 154(1), pages 119-137, January.
    9. Moser, Peter, 1999. "The impact of legislative institutions on public policy: a survey," European Journal of Political Economy, Elsevier, vol. 15(1), pages 1-33, March.
    10. Pablo T. Spiller & Sanny Liao, 2006. "Buy, Lobby or Sue: Interest Groups' Participation in Policy Making - A Selective Survey," NBER Working Papers 12209, National Bureau of Economic Research, Inc.
    11. Anwar Hussain & David Laband, 2005. "The tragedy of the political commons: Evidence from U.S. Senate roll call votes on environmental legislation," Public Choice, Springer, vol. 124(3), pages 353-364, September.
    12. Crombez, Christophe & Groseclose, Timothy J. & Krehbiel, Keith, 2005. "Gatekeeping," Research Papers 1861r1, Stanford University, Graduate School of Business.
    13. Mat McCubbins & Roger Noll & Barry Weingast, 2005. "The Political Economy of Law: Decision-Making by Judicial, Legislative, Executive and Administrative Agencies," Discussion Papers 04-035, Stanford Institute for Economic Policy Research.
    14. Randall Bennett & Christine Loucks, 2011. "Financial Services Industry PAC Contributions and Senate Committee Membership," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 39(3), pages 203-216, September.
    15. Matt E. Ryan, 2014. "Allocating Infection: The Political Economy Of The Swine Flu (H1n1) Vaccine," Economic Inquiry, Western Economic Association International, vol. 52(1), pages 138-154, January.
    16. Diana W. Thomas & Michael D. Thomas, 2022. "Regulation, competition, and the social control of business," Public Choice, Springer, vol. 193(1), pages 109-125, October.
    17. Ben-David, Shaul & Brookshire, David S. & Burness, Stuart & McKee, Michael & Schmidt, Christian, 1999. "Heterogeneity, Irreversible Production Choices, and Efficiency in Emission Permit Markets," Journal of Environmental Economics and Management, Elsevier, vol. 38(2), pages 176-194, September.
    18. Pokrivcak, Jan, 2007. "Economics and Political Economy of Regional Trade Agreements," Working Papers 7286, TRADEAG - Agricultural Trade Agreements.
    19. Bryan P. Cutsinger & Alexander Marsella & Yang Zhou, 2022. "Insuring legislative wealth transfers: theory and evidence," Public Choice, Springer, vol. 192(1), pages 127-144, July.
    20. Xosé Carlos Arias & Gonzalo Caballero, 2003. "Instituciones, costos de transacción y políticas públicas: un panorama," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 5(8), pages 117-146, January-J.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ucp:jlawec:v:41:y:1998:i:1:p:37-83. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Journals Division (email available below). General contact details of provider: https://www.journals.uchicago.edu/JLE .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.