Advertisement

Public Choice

, Volume 101, Issue 1–2, pp 109–128 | Cite as

U.S. interest groups prefer emission trading: A new perspective

  • Gert Tinggaard Svendsen
Article

Abstract

If there is to be environmental regulation, what kind of regulation would the main interest groups then prefer? This political distortion must be taken into account when designing future environmental regulation such as CO2 regulation. The three main interest groups in the U.S. (private business, environmentalist groups and the electricity sector) prefer a grandfathered permit market. Business is attracted by this solution because free initial distribution of permits both favours existing sources financially and, furthermore, creates a barrier to entry for new firms. Environmentalist groups have changed attitudes and promote the idea too as a way of negotiating higher target reduction levels with industry to maintain voluntary contributions from their members. Finally, electric utilities prefer a grandfathered permit market, and this step towards less planned economy may be explained by the rise of competition in the U.S. electricity sector. Therefore, it is suggested that a grandfathered permit market is a more effective policy than a tax in relation to organized interests such as industry, electric utilities and environmental organizations. In perspective, the grandfathered permit market may be mixed with the use of taxes. In the case of CO2 regulation, for example, taxes may be applied to badly organized polluters, such as households and the transport sector, because their lobbying power is weak.

Keywords

Environmental Regulation Initial Distribution Emission Trading Environmental Organization Transport Sector 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Aidt, T.S. (1997). Cooperative lobbying and endogeneous trade policy. Public Choice 93: 455–475.Google Scholar
  2. APPA (1994). American Public Power Association. Brochure. Washington, DC: American Public Power Association.Google Scholar
  3. Baumol, W.J. and Oates, W.E. (1988). The theory of environmental policy. Second Edition. New York: Cambridge University Press.Google Scholar
  4. Becker, G.S. (1983). A theory of competition among pressure groups for political influence. Quarterly Journal of Economics 98: 371–400.Google Scholar
  5. Bonner, R. (1993). At the hand of Man: Peril and hope for Africa's wildlife. New York: Knopf.Google Scholar
  6. Buchanan, J.M. and Tullock, G. (1975). Polluters' profits and political response: Direct control versus taxes. American Economic Review 65: 139–147.Google Scholar
  7. Buchanan, J.M. and Tullock, G. (1976). Polluters' profits and political response: Direct control versus taxes: Reply. American Economic Review 65: 983–984.Google Scholar
  8. Dowie, M. (1995). Losing ground: American environmentalism at the close of the twentieth century. Cambridge, MA: The MIT Press.Google Scholar
  9. Driesen, D.M. (1993). Trade as a technique, not a religion. Washington, DC: Natural Resources Defense Council.Google Scholar
  10. EDF (1994). Annual report 1994–1995. New York: Environmental Defense Fund.Google Scholar
  11. EEI (1994a). Statistical yearbook of the Electric Utility Industry 1993. Washington, DC: Edison Electric Institute. Published October 1994/Number 61.Google Scholar
  12. EEI (1994b). Edison Electric Institute... the Association of Investor-Owned ElectricUtilities. Brochure. Washington, DC: Edison Electric Institute.Google Scholar
  13. Frederiksson, P.G. (1997). The political economy of pollution taxes in a small open economy. Journal of Environmental Economics and Management 33: 44–58.Google Scholar
  14. Frey, B.S. (1994). Direct democracy: Politico-economic lessons from Swiss experience. Papers and Proceedings. American Economic Review 84: 338–343.Google Scholar
  15. Goffman, J. (1994). Testimony of Joseph Goffman, Senior Attorney, Environmental Defense Fund before the Subcommittee on Energy and Power Committee on Energy and Commerce.United States House of Representatives, 5 October 1994.Google Scholar
  16. Goodin, R.E. (1994). Selling environmental indulgences. Kyklos 47: 573–596.Google Scholar
  17. Green, D.P. and Shapiro, I. (1994). Pathologies of rational choice theory: A critique of applications in political science. New Haven: Yale University Press.Google Scholar
  18. Grossman, G.M. and Helpman, E. (1994). Protection for sale. American Economic Review 84: 833–850.Google Scholar
  19. Hahn, R.W. (1989). Economic prescriptions for environmental problems: How the patient followed the doctor's orders. Journal of Economic Perspectives 3: 95–114.Google Scholar
  20. Hahn, R.W. (1990). The political economy of environmental regulation: Towards a unifying framework. Public Choice 65: 21–47.Google Scholar
  21. Hahn, R.W. and Stavins, R.N. (1992). Economic incentives for environmental protection: Integrating theory and practice. American Economic Review 82: 464–468.Google Scholar
  22. Hardin, R. (1982). Collective action. Resources for the future. Baltimore: Johns Hopkins University Press.Google Scholar
  23. Hillman, A.L. and Ursprung, H.W. (1992). The influence of environmental concerns on the political determination of trade policy. In K. Anderson and R. Blackhurst (Eds.), The greening of the world trade issue, 195–220. New York: Ann Arbor: The University of Michigan Press.Google Scholar
  24. Howe, C.W. (1994). Taxes versus tradable discharge permits: A review in the light of the U.S. and European experience. Environmental and Resource Economics 4: 151–169.Google Scholar
  25. Kete, N. (1992). 'The U.S. Acid Rain Control Allowance Trading System' in Climate change: Designing a tradeable permit system, OECD, Paris.Google Scholar
  26. Lohmann, A.S. (1994). Incentive charges in environmental policies: Why are they white ravens? In M. Faure et al. (Eds.), Environmental standards in the European Union in an interdisciplinary framework, 117–133. Apeldoorn.Google Scholar
  27. Major, M.J. (1992). A trading market for pollution. Public Power July-August: 34–38.Google Scholar
  28. Mitnick, B. (1980). The political economy of regulation. New York: Colombia University Press.Google Scholar
  29. Mueller, D.C. (1989). Public choice II. Cambridge: Cambridge University Press.Google Scholar
  30. Nelson, R.H. (1990). Unoriginal sin: The Judeo-Christian roots of ecotheology. Policy Review 53: 53–59.Google Scholar
  31. Nelson, R. (1995). Sustainability, efficiency, and God: Economic values and the sustainability debate. Annual Reviews of Ecological Systems 26: 135–154.Google Scholar
  32. Nentjes, A. and Dijkstra, B. (1994). The political economy of instrument choice in environmental policy. In M. Faure et al. (Eds.), Environmental standards in the European Union in an interdisciplinary framework, 197–216. Apeldoorn/Antwerpen: Maklu.Google Scholar
  33. NIEP (1994). The competitive power revolution: Independent energy's expanding role in electricity generation.Washington, DC: National Independent Energy Producers. October.Google Scholar
  34. NRCA (1993). The G & Ts. Brochure. Washington, DC: National Rural Electric Cooperative Association.Google Scholar
  35. NRDC (1994). The power of law, the power of science, the power of people: In defense of the environment. Brochure. New York: Natural Resources Defense Council.Google Scholar
  36. Oates, W.E. (1995). Green taxes: Can we protect the environment and improve the tax system at the same time? Southern Economic Journal 4: 915–922.Google Scholar
  37. Olson, M. (1965). The logic of collective action. Cambridge: Cambridge University Press.Google Scholar
  38. Olson, M. (1982). The rise and decline of nations. New Haven: Yale University Press.Google Scholar
  39. Olson, M. (1991). Rational ignorance, professional research, and politician's dilemmas. In W.H. Robinson and C.H. Wellborn (Eds.), Knowledge, power, and the Congress. Washington, DC: The Congressional Quarterly.Google Scholar
  40. Olson, M. (1993). Dictatorship, democracy, and development. American Political Science Review 87: 567–576.Google Scholar
  41. Raufer, R.K. and Feldman, S.L. (1987). Acid rain and emissions trading: Implementing a market approach to pollution control. Savage, MD: Rowman & Littlefeld.Google Scholar
  42. Raufer, R.K., Hill, L.G. and Samsa, M.E. (1981). Emission fees and TERA: Evaluation of policy alternatives in the twin cities. Journal of the Air Pollution Control Association 31: 839–845.Google Scholar
  43. Seligman, D.A. (1994). Emissions trading: Opportunity or scam? A guide for activists. The Sierra Club, Center for Environmental Innovation. Washington, DC: Understanding Green Markets Project.Google Scholar
  44. Sierra Club (1994). Save America's last wild lands.... Brochure. San Francisco: Sierra Club.Google Scholar
  45. Snow, D. (1992). Inside the environmental movement: Meeting the leadership challenge. Washington, DC: The Conservation Fund, Island Press.Google Scholar
  46. Stavins, R.N. and Whitehead, B.W. (1992). Pollution changes for environmental protection: A policy link between energy and environment. Annual Reviews (Energy and Environment) 17: 187–210.Google Scholar
  47. Svendsen, G.T. (1995). California shows the future of electricity production in the Single Market. Energy Policy 10: 857–859.Google Scholar
  48. Svendsen, G.T. (1998a). Public choice and environmental regulation: Tradable permit systems in the United States and CO2 taxation in Europe. PhD Thesis, Forthcoming. Cheltenham: Edward Elgar. August.Google Scholar
  49. Svendsen, G.T. (1998b). The US acid rain program: Design, performance and assessment. Government & Policy. Forthcoming.Google Scholar
  50. Svendsen, G.T. (1998c). A general model for CO2 regulation: The case of Denmark. Energy Policy 26: 33–44.Google Scholar
  51. Tietenberg, T.H. (1985). Emissions trading: An exercise in reforming pollution policy. Washington, DC: Resources for the Future.Google Scholar
  52. Ursprung, H.W. (1991). Economic policies and political competition. In A. Hillman (Ed.), Markets and politicians, 1–41. Kluwer: Boston.Google Scholar
  53. Weck-Hannemann, H. and Frey, B.S. (1995). Are incentive instruments as good as economists believe? Some new considerations. In L. Bovenberg and S. Cnossen (Eds.), Public economics and the environment in an imperfect world. Kluwer: Boston.Google Scholar

Copyright information

© Kluwer Academic Publishers 1999

Authors and Affiliations

  • Gert Tinggaard Svendsen
    • 1
  1. 1.Department of EconomicsThe Aarhus School of BusinessAarhus VDenmark

Personalised recommendations