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Environmental Policy in Majoritarian Systems

  • Per G. Fredriksson

    (University of Louisville)

  • Xenia Matschke

    (University of Connecticut)

  • Jenny Minier

    (University of Kentucky)

This paper sheds new light on the determination of environmental policies in majoritarian federal electoral systems such as the U.S., and derives implications for the environmental federalism debate on whether the national or local government should have authority over environmental policies. In the absence of majority bias, the socially preferred policy would be federal district-level taxation which accounts both for cross-boundary pollution and differences in industry concentration across districts. In majoritarian systems, however, where the legislature consists of geographically distinct electoral districts, the majority party (at either the national or the state level) favors its own home districts; depending on the location of polluting industries and the associated pollution damages, the majority party may therefore impose sub-optimally high or low pollution taxes due to a majority bias. We show that majority bias can influence the social-welfare ranking of alternative government policies. In some cases, the existence of majority bias may actually make decentralized or federal uniform taxation the preferred solution.

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Paper provided by University of Connecticut, Department of Economics in its series Working papers with number 2008-01.

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Length: 32 pages
Date of creation: Jan 2008
Date of revision: Sep 2009
Handle: RePEc:uct:uconnp:2008-01
Note: We thank Josh Ederington and the participants at a presentation at the 54th Annual North American Meetings of the Regional Science Association International in Savannah for helpful comments.
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Web page: http://www.econ.uconn.edu/

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