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How Green Should Environmental Regulators Be?

  • Sandeep Kapur

    (Department of Economics, Mathematics & Statistics, Birkbeck)

  • Anthony Heyes

    (Royal Holloway, University of London)

The extent to which environmental regulatory institutions are either 'green' or 'brown' impacts not just the intensity of regulation at any moment, but also the incentives for the development of new pollution-control technologies. We set up a strategic model of R&D in which a polluter can deploy technologies developed in-house, or license technologies developed by specialist outsiders. Polluters exert R&D effort and may even develop redundant technologies to improve the terms on which they procure technology from outside. We find that, while regulatory bias has an ambiguous impact on the best-available technology, strategic delegation to systematically biased regulators can improve social welfare.

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File URL: http://www.bbk.ac.uk/ems/research/wp/2010/PDFs/BWPEF1016.pdf
File Function: First version, 2010
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Paper provided by Birkbeck, Department of Economics, Mathematics & Statistics in its series Birkbeck Working Papers in Economics and Finance with number 1016.

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Date of creation: Dec 2010
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Handle: RePEc:bbk:bbkefp:1016
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