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Policy Persistence in Environmental Regulation

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  • Zhao, Jinhua
  • Kling, Catherine L.

Abstract

We study the optimal emission standards under uncertain pollution damages and transaction costs associated with policy changes. We show that in many situations, the authority should avoid or reduce the scale of a policy change in the presence of future transaction costs. Then policy persistence is a rational response of forward-looking policy makers to future transaction costs, rather than a passive outcome of the current political process.

Suggested Citation

  • Zhao, Jinhua & Kling, Catherine L., 2000. "Policy Persistence in Environmental Regulation," Hebrew University of Jerusalem Archive 18629, Hebrew University of Jerusalem.
    • Handle: RePEc:ags:hebarc:18629
    DOI: 10.22004/ag.econ.18629
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    2. Soo Keong Yong & Stuart McDonald, 2018. "Emissions tax and second-mover advantage in clean technology R&D," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 20(1), pages 89-108, January.
    3. Warren, Patrick L. & Wilkening, Tom S., 2012. "Regulatory fog: The role of information in regulatory persistence," Journal of Economic Behavior & Organization, Elsevier, vol. 84(3), pages 840-856.
    4. Safarzynska, Karolina & van den Bergh, Jeroen C.J.M., 2010. "Evolving power and environmental policy: Explaining institutional change with group selection," Ecological Economics, Elsevier, vol. 69(4), pages 743-752, February.
    5. Jinhua Zhao, 2022. "Aggregate emission intensity targets: Applications to the Paris Agreement," Economic Inquiry, Western Economic Association International, vol. 60(4), pages 1875-1897, October.
    6. Charles Sims & David Finnoff, 2016. "Opposing Irreversibilities and Tipping Point Uncertainty," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 3(4), pages 985-1022.
    7. Jessica Coria & Magnus Hennlock, 2012. "Taxes, permits and costly policy response to technological change," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 14(1), pages 35-60, January.
    8. Patrick Warren & Tom Wilkening, 2010. "Regulatory Fog: The Informational Origins of Regulatory Persistence," Department of Economics - Working Papers Series 1113, The University of Melbourne.
    9. Mort Webster, 2008. "Incorporating Path Dependency into Decision-Analytic Methods: An Application to Global Climate-Change Policy," Decision Analysis, INFORMS, vol. 5(2), pages 60-75, June.
    10. Lai, Lawrence W.C. & Lorne, Frank T. & Davies, Stephen N.G. & Chau, K.W., 2025. "Innovative planning for sustainable development: A win-win approach through conversion of negative into positive externalities," Land Use Policy, Elsevier, vol. 157(C).

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