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Policy persistence in environmental regulation

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  • Zhao, Jinhua
  • Kling, Catherine L.

Abstract

This paper is a study of the optimal emission standards under uncertain pollution damages and transaction costs associated with policy changes. The authors show that, in many situations, either policy changes should be avoided or they should be reduced in scale due to the presence of future transaction costs. Under this constraint, policy persistence can be viewed as the rational response of forward-looking policy makers to future transaction costs, and not just the passive outcome of the current political process.
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Suggested Citation

  • Zhao, Jinhua & Kling, Catherine L., 2003. "Policy persistence in environmental regulation," Resource and Energy Economics, Elsevier, vol. 25(3), pages 255-268, August.
    • Handle: RePEc:eee:resene:v:25:y:2003:i:3:p:255-268
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    References listed on IDEAS

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    1. Pindyck, Robert S., 2000. "Irreversibilities and the timing of environmental policy," Resource and Energy Economics, Elsevier, vol. 22(3), pages 233-259, July.
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    6. Hahn, Robert W., 2000. "The Impact of Economics on Environmental Policy," Journal of Environmental Economics and Management, Elsevier, vol. 39(3), pages 375-399, May.
    7. Shogren, Jason F., 1989. "Political Economy of Government Regulation (The)," Staff General Research Papers Archive 294, Iowa State University, Department of Economics.
    8. Keohane, Nathaniel O. & Revesz, Richard L. & Stavins, Robert N., 1997. "The Positive Political Economy of Instrument Choice in Environmental Policy," Discussion Papers 10759, Resources for the Future.
    9. Kolstad, Charles D., 1996. "Fundamental irreversibilities in stock externalities," Journal of Public Economics, Elsevier, vol. 60(2), pages 221-233, May.
    10. Avinash K. Dixit & Robert S. Pindyck, 1994. "Investment under Uncertainty," Economics Books, Princeton University Press, edition 1, number 5474.
    11. Maloney, Michael T & McCormick, Robert E, 1982. "A Positive Theory of Environmental Quality Regulation," Journal of Law and Economics, University of Chicago Press, vol. 25(1), pages 99-123, April.
    12. Arvind Panagariya & Paul R. Portney & Robert M. Schwab (ed.), 1999. "environmental and public economics," Books, Edward Elgar Publishing, number 1287.
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    Cited by:

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    2. Warren, Patrick L. & Wilkening, Tom S., 2012. "Regulatory fog: The role of information in regulatory persistence," Journal of Economic Behavior & Organization, Elsevier, vol. 84(3), pages 840-856.
    3. Safarzynska, Karolina & van den Bergh, Jeroen C.J.M., 2010. "Evolving power and environmental policy: Explaining institutional change with group selection," Ecological Economics, Elsevier, vol. 69(4), pages 743-752, February.
    4. Jinhua Zhao, 2022. "Aggregate emission intensity targets: Applications to the Paris Agreement," Economic Inquiry, Western Economic Association International, vol. 60(4), pages 1875-1897, October.
    5. Charles Sims & David Finnoff, 2016. "Opposing Irreversibilities and Tipping Point Uncertainty," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 3(4), pages 985-1022.
    6. Jessica Coria & Magnus Hennlock, 2012. "Taxes, permits and costly policy response to technological change," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 14(1), pages 35-60, January.
    7. Patrick Warren & Tom Wilkening, 2010. "Regulatory Fog: The Informational Origins of Regulatory Persistence," Department of Economics - Working Papers Series 1113, The University of Melbourne.
    8. Mort Webster, 2008. "Incorporating Path Dependency into Decision-Analytic Methods: An Application to Global Climate-Change Policy," Decision Analysis, INFORMS, vol. 5(2), pages 60-75, June.

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