IDEAS home Printed from https://ideas.repec.org/a/kap/pubcho/v107y2001i1p65-85.html
   My bibliography  Save this article

How Pollution Taxes may Increase Pollution and Reduce Net Revenues

Author

Listed:
  • Per Fredriksson

Abstract

This paper develops a positive theory of pollution taxation by a federal authority when pollution abatement subsidies are used by local governments. Environmental and industry lobby groups influence governments with campaign contributions. First, pollution may increase in the pollution tax because the abatement subsidy increases (decreases) with the tax, and pollution increases (decreases) in the abatement subsidy. This occurs because the lobbying incentives change at a pollution tax reform. Second, pollution taxes may reduce net revenues because subsidy expenditures rise. Third, pollution may increase simultaneously as net revenues fall. Finally, the welfare effect of a pollution tax may be negative. Copyright Kluwer Academic Publishers 2001

Suggested Citation

  • Per Fredriksson, 2001. "How Pollution Taxes may Increase Pollution and Reduce Net Revenues," Public Choice, Springer, vol. 107(1), pages 65-85, April.
    • Handle: RePEc:kap:pubcho:v:107:y:2001:i:1:p:65-85
    DOI: 10.1023/A:1010360927680
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1023/A:1010360927680
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1023/A:1010360927680?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 look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Robert D. Tollison & Roger D. Congleton (ed.), 1995. "The Economic Analysis Of Rent Seeking," Books, Edward Elgar Publishing, number 592.
    2. Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, vol. 84(4), pages 833-850, September.
    3. Denzau, Arthur T. & Munger, Michael C., 1986. "Legislators and Interest Groups: How Unorganized Interests Get Represented," American Political Science Review, Cambridge University Press, vol. 80(1), pages 89-106, March.
    4. 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.
    5. Krueger, Anne O, 1974. "The Political Economy of the Rent-Seeking Society," American Economic Review, American Economic Association, vol. 64(3), pages 291-303, June.
    6. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
    7. Stratmann, Thomas, 1992. "Are Contributions Rational? Untangling Strategies of Political Action Committees," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 647-664, June.
    8. Magee,Stephen P. & Brock,William A. & Young,Leslie, 1989. "Black Hole Tariffs and Endogenous Policy Theory," Cambridge Books, Cambridge University Press, number 9780521377003.
    9. Charles Rowley & Anne Rathbone, 2013. "The political economy of antitrust," Chapters, in: Manfred Neumann & Jürgen Weigand (ed.), The International Handbook of Competition – Second Edition, chapter 6, pages 169-206, Edward Elgar Publishing.
    10. Fredriksson, Per G., 1998. "Environmental policy choice: Pollution abatement subsidies," Resource and Energy Economics, Elsevier, vol. 20(1), pages 51-63, March.
    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. Silberman, Jonathan I & Durden, Garey C, 1976. "Determining Legislative Preferences on the Minimum Wage: An Economic Approach," Journal of Political Economy, University of Chicago Press, vol. 84(2), pages 317-329, April.
    13. Glenn Jenkins & RANJIT LAMECH, 1992. "Fiscal Policies To Control Pollution: International Experience," Development Discussion Papers 1992-01, JDI Executive Programs.
    14. Campos, Jose Edgardo L, 1989. "Legislative Institutions, Lobbying, and the Endogenous Choice of Regulatory Instruments: A Political Economy Approach to Instrument Choice," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 5(2), pages 333-353, Fall.
    15. Robert Tollison, 2012. "The economic theory of rent seeking," Public Choice, Springer, vol. 152(1), pages 73-82, July.
    16. Dixit, Avinash & Grossman, Gene M & Helpman, Elhanan, 1997. "Common Agency and Coordination: General Theory and Application to Government Policy Making," Journal of Political Economy, University of Chicago Press, vol. 105(4), pages 752-769, August.
    17. Leidy, Michael P & Hoekman, Bernard M, 1994. "'Cleaning Up' while Cleaning Up? Pollution Abatement, Interest Groups and Contingent Trade Policies," Public Choice, Springer, vol. 78(3-4), pages 241-258, March.
    18. Aidt, Toke S., 1998. "Political internalization of economic externalities and environmental policy," Journal of Public Economics, Elsevier, vol. 69(1), pages 1-16, July.
    19. Stuart Mestelman, 1984. "The social choice of alternative corrective devices," Public Choice, Springer, vol. 42(1), pages 55-71, January.
    20. Per G. Fredriksson, 1999. "The Political Economy of Trade Liberalization and Environmental Policy," Southern Economic Journal, John Wiley & Sons, vol. 65(3), pages 513-535, January.
    21. Cropper, Maureen L. & William N. Evans & Stephen J. Berard & Maria M. Ducla-Soares & Paul R. Portney, 1992. "The Determinants of Pesticide Regulation: A Statistical Analysis of EPA Decision Making," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 175-197, February.
    22. Helland, Eric, 1998. "Environmental Protection in the Federalist System: The Political Economy of NPDES Inspections," Economic Inquiry, Western Economic Association International, vol. 36(2), pages 305-319, April.
    23. 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.
    24. David P. Baron, 1989. "Service-Induced Campaign Contributions and the Electoral Equilibrium," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 104(1), pages 45-72.
    25. Mark Pearson, 1995. "The political economy of implementing environmental taxes," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 2(2), pages 357-373, August.
    26. Schleich, Joachim, 1999. "Environmental quality with endogenous domestic and trade policies1," European Journal of Political Economy, Elsevier, vol. 15(1), pages 53-71, March.
    27. Gary S. Becker, 1983. "A Theory of Competition Among Pressure Groups for Political Influence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(3), pages 371-400.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Widhayani Puri Setioningtyas & Csaba Bálint Illés & Anna Dunay & Abdul Hadi & Tony Susilo Wibowo, 2022. "Environmental Economics and the SDGs: A Review of Their Relationships and Barriers," Sustainability, MDPI, vol. 14(12), pages 1-24, June.
    2. Fuhai Hong & Tat-How Teh, 2019. "Bureaucratic Shirking, Corruption, and Firms’ Environmental Investment and Abatement," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(2), pages 505-538, October.
    3. Divya Datt & Meeta Keswani Mehra, 2016. "Environmental Policy in a Federation with Special Interest Politics and Inter-Governmental Grants," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 64(4), pages 575-595, August.
    4. Cong Minh Huynh, 2020. "Shadow economy and air pollution in developing Asia: what is the role of fiscal policy?," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 22(3), pages 357-381, July.
    5. John K. Wilson & Richard Damania, 2003. "Corruption, Political Competition and Environmental Policy," School of Economics and Public Policy Working Papers 2003-09, University of Adelaide, School of Economics and Public Policy.
    6. Leo Wangler, 2012. "The political economy of the green technology sector: A study about institutions, diffusion and efficiency," European Journal of Law and Economics, Springer, vol. 33(1), pages 51-81, February.
    7. Henrik Hammar & Löfgren Åsa & Thomas Sterner, 2004. "Political Economy Obstacles to Fuel Taxation," The Energy Journal, , vol. 25(3), pages 1-17, July.
    8. Marc St‐Pierre & Aaron A. Elrod, 2022. "The perverse effect of environmental regulation on emissions: The role of product‐mix changes," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 24(1), pages 197-235, February.
    9. Fünfgelt, Joachim & Schulze, Günther G., 2016. "Endogenous environmental policy for small open economies with transboundary pollution," Economic Modelling, Elsevier, vol. 57(C), pages 294-310.
    10. Weijiang Liu & Tingting Liu, 2022. "Exploring the Impact and Path of Environmental Protection Tax on Different Air Pollutant Emissions," IJERPH, MDPI, vol. 19(8), pages 1-14, April.

    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. Richard Damania & Per Fredriksson & Thomas Osang, 2004. "Collusion, Collective Action and Protection: Theory and Evidence," Public Choice, Springer, vol. 121(3), pages 279-308, February.
    2. Eliste, Paavo & Fredriksson, Per G., 2002. "Environmental Regulations, Transfers, and Trade: Theory and Evidence," Journal of Environmental Economics and Management, Elsevier, vol. 43(2), pages 234-250, March.
    3. Fredriksson, Per G. & Gaston, Noel, 1999. "The "greening" of trade unions and the demand for eco-taxes," European Journal of Political Economy, Elsevier, vol. 15(4), pages 663-686, November.
    4. 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.
    5. Stavins, Robert, 2004. "Introduction to the Political Economy of Environmental Regulations," RFF Working Paper Series dp-04-12, Resources for the Future.
    6. Rauscher, Michael, 2001. "International trade, foreign investment, and the environment," Thuenen-Series of Applied Economic Theory 29, University of Rostock, Institute of Economics.
    7. Per G. Fredriksson, 1999. "The Political Economy of Trade Liberalization and Environmental Policy," Southern Economic Journal, John Wiley & Sons, vol. 65(3), pages 513-525, January.
    8. 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.
    9. Paul Lanoie & Jérôme Moreau & Georges A. Tanguay, 2001. "Environmental Policy, Public Interest and Political Market," CIRANO Working Papers 2001s-37, CIRANO.
    10. Olper, Alessandro, 2017. "The political economy of trade-related regulatory policy: environment and global value chain," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 5(3), February.
    11. Richard Damania & Per Fredriksson & Muthukumara Mani, 2004. "The Persistence of Corruption and Regulatory Compliance Failures: Theory and Evidence," Public Choice, Springer, vol. 121(3), pages 363-390, February.
    12. Stavins, Robert & Keohane, Nathaniel & Revesz, Richard, 1997. "The Positive Political Economy of Instrument Choice in Environmental Policy," RFF Working Paper Series dp-97-25, Resources for the Future.
    13. Georges A. Tanguay & Paul Lanoie & Jérôme Moreau, 2001. "Environmental Policy, Public Interest and Political Market," Cahiers de recherche 01-01, HEC Montréal, Institut d'économie appliquée.
    14. 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.
    15. Edwards, Eric C. & Cristi, Oscar & Edwards, Gonzalo & Libecap, Gary D., 2018. "An illiquid market in the desert: estimating the cost of water trade restrictions in northern Chile," Environment and Development Economics, Cambridge University Press, vol. 23(6), pages 615-634, December.
    16. Leo Wangler & Juan-Carlos Altamirano-Cabrera & Hans-Peter Weikard, 2013. "The political economy of international environmental agreements: a survey," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 13(3), pages 387-403, September.
    17. 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.
    18. Potters, Jan & Sloof, Randolph, 1996. "Interest groups: A survey of empirical models that try to assess their influence," European Journal of Political Economy, Elsevier, vol. 12(3), pages 403-442, November.
    19. Conconi, P., 2000. "Green and Producer Lobbies: Enemies or Allies?," The Warwick Economics Research Paper Series (TWERPS) 570, University of Warwick, Department of Economics.
    20. Damania, Richard & Fredriksson, Per G. & List, John A., 2003. "Trade liberalization, corruption, and environmental policy formation: theory and evidence," Journal of Environmental Economics and Management, Elsevier, vol. 46(3), pages 490-512, November.

    More about this item

    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:pubcho:v:107:y:2001:i:1:p:65-85. 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.