IDEAS home Printed from https://ideas.repec.org/p/zbw/vfsc16/145920.html
   My bibliography  Save this paper

Emission taxes, lobbying, and incomplete enforcement

Author

Listed:
  • Gerigk, Joschka

Abstract

In this paper, I analyze incomplete enforcement in a political economy model. I use a contest framework to explain changes in lobbying behavior when special interest groups anticipate the incomplete enforceability of environmental regulation. In this setting, I compare two instruments, namely an abatement standard and an emission tax. Regulation of a polluting output is proposed and two lobby groups - representing the interests of producers and environmentalists, respectively - seek to influence the government in order to prevent or support the implementation of the regulation. I develop a general framework to demonstrate that the lobbying efforts are determined not only by the stringency of the proposed policy - as determined by the level of the tax or abatement standard - but, importantly, also by its enforceability. Using common functional specifications, I then show that, when an emission tax is proposed, incomplete enforcement may not only reduce the industry's opposition to regulation compared to a situation with full enforcement, but it may, despite the possibility of untruthful reporting, also reduce expected environmental damage. When instead an abatement standard is proposed, however, the effects of regulatory stringency and enforceability are ambiguous, rendering unequivocal policy recommendations for this case impossible.

Suggested Citation

  • Gerigk, Joschka, 2016. "Emission taxes, lobbying, and incomplete enforcement," Annual Conference 2016 (Augsburg): Demographic Change 145920, Verein für Socialpolitik / German Economic Association.
  • Handle: RePEc:zbw:vfsc16:145920
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/145920/1/VfS_2016_pid_7061.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, vol. 84(4), pages 833-850, September.
    2. Anthony Heyes, 1994. "Environmental enforcement when ‘inspectability’ is endogenous: A model with overshooting properties," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 4(5), pages 479-494, October.
    3. Garvie, Devon & Keeler, Andrew, 1994. "Incomplete enforcement with endogenous regulatory choice," Journal of Public Economics, Elsevier, vol. 55(1), pages 141-162, September.
    4. Macho-Stadler, Ines & Perez-Castrillo, David, 2006. "Optimal enforcement policy and firms' emissions and compliance with environmental taxes," Journal of Environmental Economics and Management, Elsevier, vol. 51(1), pages 110-131, January.
    5. Harford, Jon D., 1987. "Self-reporting of pollution and the firm's behavior under imperfectly enforceable regulations," Journal of Environmental Economics and Management, Elsevier, vol. 14(3), pages 293-303, September.
    6. Lotte Ovaere & Stef Proost & Sandra Rousseau, 2013. "The choice of environmental regulatory enforcement by lobby groups," Journal of Environmental Economics and Policy, Taylor & Francis Journals, vol. 2(3), pages 328-347, November.
    7. Agnar Sandmo, 2002. "Efficient Environmental Policy with Imperfect Compliance," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 23(1), pages 85-103, September.
    8. Nowell, Clifford & Shogren, Jason F, 1994. "Challenging the Enforcement of Environmental Regulation," Journal of Regulatory Economics, Springer, vol. 6(3), pages 265-282, September.
    9. Harford, Jon D., 1978. "Firm behavior under imperfectly enforceable pollution standards and taxes," Journal of Environmental Economics and Management, Elsevier, vol. 5(1), pages 26-43, March.
    10. Kambhu, John, 1989. "Regulatory Standards, Noncompliance and Enforcement," Journal of Regulatory Economics, Springer, vol. 1(2), pages 103-114, June.
    11. John Kambhu, 1989. "Regulatory standards, noncompliance and enforcement," Research Paper 8902, Federal Reserve Bank of New York.
    12. Heyes, Anthony, 2000. "Implementing Environmental Regulation: Enforcement and Compliance," Journal of Regulatory Economics, Springer, vol. 17(2), pages 107-129, March.
    13. Ian MacKenzie & Markus Ohndorf, 2012. "Optimal monitoring of credit-based emissions trading under asymmetric information," Journal of Regulatory Economics, Springer, vol. 42(2), pages 180-203, October.
    14. Gerigk, Joschka & MacKenzie, Ian & Ohndorf, Markus, 2015. "Environmental policy diffusion and lobbying," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113132, Verein für Socialpolitik / German Economic Association.
    Full references (including those not matched with items on IDEAS)

    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:vfsc16:145920. 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: (ZBW - Leibniz Information Centre for Economics). General contact details of provider: http://edirc.repec.org/data/vfsocea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.