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Democracy Deficits, Inequality and Pollution. A Politico-Economic Analysis

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  • Drosdowski, Thomas

Abstract

The article examines conditions, under which the degree of democratization influences environmental policy outcomes, with a given resource endowments' heterogeneity as a crucial feature of a politico-economic process. We develop an OLG model with pollution as an aggregate externality. The decisive voter, whose income can differ from the median one, chooses redistribution to finance abatement. By comparing the optimal taxation under alternative political regimes we analyze their implications for environment, efficiency and growth. We find that left regimes, choosing more progressive redistribution, maintain better environmental quality, which supports empirical research. Inequality does not appear to be harmful for the environment, and it dampens the effect of democracy imperfections on redistribution.

Suggested Citation

  • Drosdowski, Thomas, 2005. "Democracy Deficits, Inequality and Pollution. A Politico-Economic Analysis," Hannover Economic Papers (HEP) dp-323, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
  • Handle: RePEc:han:dpaper:dp-323
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    References listed on IDEAS

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    Keywords

    pollution; political economy; inequality; redistribution; growth;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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