Scandinavian Working Papers in Economics

Working Papers in Economics,
University of Gothenburg, Department of Economics

No 147: The Political Economy of Refunded Emissions Payment Programs

Per G. Fredriksson () and Thomas Sterner ()
Additional contact information
Per G. Fredriksson: Department of Economics, Southern Methodist University, Postal: PO Box 750496, Dallas, TX 75275-0496, USA
Thomas Sterner: Department of Economics, School of Economics and Commercial Law, Göteborg University, Postal: Box 640, SE 405 30 GÖTEBORG

Abstract: Lobbying by pollution firms is commonly viewed as having a negative impact on the stringency of environmental policy. We ask whether lobbying instead can bring about stricter environmental policy, and how imperfect property rights affect the policy outcome. We study the effects on the equilibrium pollution tax of refunding all tax payments to the polluting firms. Relatively clean firms may be induced to lobby for a higher pollution levy. However, this incentive declines when the property rights over the accumulated funds are insecure.

Keywords: Political economy; Lobbying; Environmental Policy; Gaseous emisions; Nox

JEL-codes: D72; D78; Q28

9 pages, January 7, 2004

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Published as
Per G. Fredriksson and Thomas Sterner, (2005), 'The Political Economy of Refunded Emissions Payment Programs', Economic Letters, vol 87, no 1, pages 113-119

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