IDEAS home Printed from https://ideas.repec.org/a/kap/atlecj/v38y2010i4p399-409.html
   My bibliography  Save this article

Dynamics of Environmental Regulation and Voters’ Biased Beliefs: A Political Economy Approach

Author

Listed:
  • Louis Jaeck
  • Gilbert Bougi

Abstract

This paper develops a political economy model which determines the conditions of cycles in environmental regulation. It analyzes the impact of both interest groups and voters who have biased political beliefs. Such biased beliefs are the result of the influence of activist interest groups that strategically use the beliefs formation process among ignorant voters (cascade effect). The cascade effect biases the perception of the efficiency of regulatory instruments and affects the behavior of the politician. Our model seems particularly relevant to explain the evolution of environmental policies, which are characterized by scientific controversies, such as climate change policies. The high media coverage of climate issues, as well as persistent debates among experts, is a favorable context for the influence of activist interest groups that use the public’s cognitive biases. Copyright International Atlantic Economic Society 2010

Suggested Citation

  • Louis Jaeck & Gilbert Bougi, 2010. "Dynamics of Environmental Regulation and Voters’ Biased Beliefs: A Political Economy Approach," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 38(4), pages 399-409, December.
    • Handle: RePEc:kap:atlecj:v:38:y:2010:i:4:p:399-409
    DOI: 10.1007/s11293-010-9243-1
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s11293-010-9243-1
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11293-010-9243-1?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Bruno S. Frey & Susanne Neckermann, 2008. "Awards: A view from psychological economics," IEW - Working Papers 357, Institute for Empirical Research in Economics - University of Zurich.
    2. Bikhchandani, Sushil & Hirshleifer, David & Welch, Ivo, 1992. "A Theory of Fads, Fashion, Custom, and Cultural Change in Informational Cascades," Journal of Political Economy, University of Chicago Press, vol. 100(5), pages 992-1026, October.
    3. Brady, Gordon L & Clark, J R & Davis, William L, 1995. "The Political Economy of Dissonance," Public Choice, Springer, vol. 82(1-2), pages 37-51, January.
    4. Dijkstra, Bouwe R., 1998. "A two-stage rent-seeking contest for instrument choice and revenue division, applied to environmental policy," European Journal of Political Economy, Elsevier, vol. 14(2), pages 281-301, May.
    5. Aidt, T.S.Toke Skovsgaard & Dutta, Jayasri, 2004. "Transitional politics: emerging incentive-based instruments in environmental regulation," Journal of Environmental Economics and Management, Elsevier, vol. 47(3), pages 458-479, May.
    6. R. Damania, 1999. "Political Competition, Rent Seeking and the Choice of Environmental Policy Instruments," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 13(4), pages 415-433, June.
    7. Aidt, Toke S., 1998. "Political internalization of economic externalities and environmental policy," Journal of Public Economics, Elsevier, vol. 69(1), pages 1-16, July.
    8. Kuran, Timur, 1990. "Private and Public Preferences," Economics and Philosophy, Cambridge University Press, vol. 6(1), pages 1-26, April.
    9. Buchanan, James M & Tullock, Gordon, 1975. "Polluters' Profits and Political Response: Direct Controls Versus Taxes," American Economic Review, American Economic Association, vol. 65(1), pages 139-147, March.
    10. Julien Hanoteau, 2004. "Lobbying pour les permis négociables et non-neutralité du mode d'allocation," Revue économique, Presses de Sciences-Po, vol. 55(3), pages 517-525.
    11. Fredriksson, Per G., 1997. "The Political Economy of Pollution Taxes in a Small Open Economy," Journal of Environmental Economics and Management, Elsevier, vol. 33(1), pages 44-58, May.
    12. Thomas A. Barthold, 1994. "Issues in the Design of Environmental Excise Taxes," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 133-151, Winter.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ian A. MacKenzie, 2017. "Rent creation and rent seeking in environmental policy," Public Choice, Springer, vol. 171(1), pages 145-166, April.
    2. Aidt, Toke S., 2010. "Green taxes: Refunding rules and lobbying," Journal of Environmental Economics and Management, Elsevier, vol. 60(1), pages 31-43, July.
    3. Canton, Joan, 2008. "Redealing the cards: How an eco-industry modifies the political economy of environmental taxes," Resource and Energy Economics, Elsevier, vol. 30(3), pages 295-315, August.
    4. Alesina, Alberto & Passarelli, Francesco, 2014. "Regulation versus taxation," Journal of Public Economics, Elsevier, vol. 110(C), pages 147-156.
    5. Ian A. MacKenzie, 2015. "Prices versus quantities with distributional rent seeking," Discussion Papers Series 548, School of Economics, University of Queensland, Australia.
    6. Dapeng Cai & Jie Li, 2020. "Pollution for Sale: Firms’ Characteristics and Lobbying Outcome," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 77(3), pages 539-564, November.
    7. Sturm, Daniel & Ulph, Alistair, 2002. "Environment, trade, political economy and imperfect information: a survey," Discussion Paper Series In Economics And Econometrics 0204, Economics Division, School of Social Sciences, University of Southampton.
    8. Stavins, Robert, 2004. "Introduction to the Political Economy of Environmental Regulations," RFF Working Paper Series dp-04-12, Resources for the Future.
    9. Grey, Felix, 2018. "Corporate lobbying for environmental protection," Journal of Environmental Economics and Management, Elsevier, vol. 90(C), pages 23-40.
    10. Yu-Bong Lai, 2009. "Is a Double Dividend Better than a Single Dividend?," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 165(2), pages 342-363, June.
    11. Wallace E. Oates & Paul R. Portney & Wallace E. Oates & Paul R. Portney, 2004. "The Political Economy of Environmental Policy," Chapters, in: Environmental Policy and Fiscal Federalism, chapter 1, pages 3-30, Edward Elgar Publishing.
    12. Satoshi Honma, 2005. "Pollution Tax under Lobbying Duopolists," Discussion Papers 22, Kyushu Sangyo University, Faculty of Economics.
    13. Stoschek, Barbara, 2007. "The political economy of environmental regulations and industry compensation," University of Göttingen Working Papers in Economics 65, University of Goettingen, Department of Economics.
    14. Anger, Niels & Böhringer, Christoph & Lange, Andreas, 2006. "Differentiation of Green Taxes: A Political-Economy Analysis for Germany," ZEW Discussion Papers 06-003, ZEW - Leibniz Centre for European Economic Research.
    15. Kawahara, Shinya, 2011. "Electoral competition with environmental policy as a second best transfer," Resource and Energy Economics, Elsevier, vol. 33(3), pages 477-495, September.
    16. Hiroaki Yamagami & Ryo Arawatari & Takeo Hori, 2021. "Ambitious Emissions Goal as a Strategic Preemption," Strategic Behavior and the Environment, now publishers, vol. 9(1-2), pages 145-174, July.
    17. Rauscher, Michael, 2001. "International trade, foreign investment, and the environment," Thuenen-Series of Applied Economic Theory 29, University of Rostock, Institute of Economics.
    18. Fredriksson, Per G, 2001. "How Pollution Taxes May Increase Pollution and Reduce Net Revenues," Public Choice, Springer, vol. 107(1-2), pages 65-85, April.
    19. Pablo Río & Xavier Labandeira, 2009. "Barriers to the introduction of market-based instruments in climate policies: an integrated theoretical framework," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 10(1), pages 41-68, March.
    20. Schleich, Joachim, 1999. "Environmental quality with endogenous domestic and trade policies1," European Journal of Political Economy, Elsevier, vol. 15(1), pages 53-71, March.

    More about this item

    Keywords

    Environmental regulation; Political economy; Collective beliefs; D78; H23; Q28;
    All these keywords.

    JEL classification:

    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

    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:kap:atlecj:v:38:y:2010:i:4:p:399-409. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.