Rent-seeking and grandfathering: The case of GHG trade in the EU
The EU Commission has recently proposed a new directive establishing a framework for greenhouse gas (GHG) emissions trading within the European Union. The idea is to devalue the emission quotas in circulation by the year 2012 at latest, so that the EU will meet its Kyoto target level of an 8% GHG reduction. Our main question is whether the final choice of allocation rule can be explained by potential industrial net winners involved in the policy making process. We answer this question by using rent-seeking theory and by analysing the Green Paper hearing replies from the main industrial groups. In other words, we want to explain and observe how rent-seeking (or lobbyism) affects the de-sign of environmental regulation and energy policy in favour of well-organized industrial interest groups. We argue that some firms are likely to reap a net gain from being regulated by a grandfathered emission trading system. This is so be-cause total costs of emission reduction and lobbyism are likely to be smaller than the total rents from having this type of regulation.
|Date of creation:||Sep 2002|
|Date of revision:|
|Contact details of provider:|| Postal: Niels Bohrs Vej 9, 6700 Esbjerg|
Phone: (+45) 6550 1000
Fax: (+45) 6550 1091
Web page: http://www.sam.sdu.dk/ime
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Svendsen, Gert Tinggaard, 1999. "U.S. Interest Groups Prefer Emission Trading: A New Perspective," Public Choice, Springer, vol. 101(1-2), pages 109-28, October.
- Svendsen, Gert Tinggaard & Christensen, Jan Lien, 1999. "The US SO2 auction: analysis and generalization," Energy Economics, Elsevier, vol. 21(5), pages 403-416, October.
- Hahn, Robert W & Stavins, Robert N, 1992. "Economic Incentives for Environmental Protection: Integrating Theory and Practice," American Economic Review, American Economic Association, vol. 82(2), pages 464-68, May.
- Cropper, Maureen L & Oates, Wallace E, 1992. "Environmental Economics: A Survey," Journal of Economic Literature, American Economic Association, vol. 30(2), pages 675-740, June.
- Markussen, Peter & Svendsen, Gert Tinggaard & Vesterdal, Morten, 2002. "The political economy of a tradable GHG permit market in the European Union," Working Papers 02-3, University of Aarhus, Aarhus School of Business, Department of Economics.
- Urs Steiner Brandt & Gert Tinggaard Svendsen, 2001. "Hot air in Kyoto, cold air in The Hague," Working Papers 22/01, University of Southern Denmark, Department of Environmental and Business Economics.
When requesting a correction, please mention this item's handle: RePEc:sdk:wpaper:35. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ulla H. Oehlenschläger)
If references are entirely missing, you can add them using this form.