The political economy of environmental regulations and industry compensation

Arbeitspapier

This paper uses a political-economy framework to analyze what consequences the exogenous introduction of a quantitative restriction on total emissions in a small open economy has on the stringency of domestic trade policy. The question is whether and to what extent the government, if it takes different lobby groups´ interests into consideration, has an incentive to compensate the polluting industry for stricter environmental regulations by granting higher protection to it. It turns out that the government will indeed tend to increase subsidization of the industry affected by environmental regulation. This compensation will even be more than complete as long as environmental interests are taken into account. Hence, contrary to what might be expected, a net benefit for the polluting sector arises from environmental restrictions.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: cege Discussion Papers ; No. 65

Classification and Topics

• Classification: Wirtschaft ; Trade and Environment ; Pollution Control Adoption and Costs; Distributional Effects; Employment Effects ; Environmental Economics: Government Policy
• Subject: environmental regulations ; international competitiveness ; political ; Umweltauflage ; Protektionismus ; Industriesubvention ; Public Choice ; Außenwirtschaftspolitik ; Internationaler Wettbewerb ; Wohlfahrtseffekt ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Stoschek, Barbara
• Event: Veröffentlichung
• (who): University of Göttingen, Center for European, Governance and Economic Development Research (cege)
• (where): Göttingen
• (when): 2007

Further information

• Handle: http://hdl.handle.net/10419/31981
• Last update: 10.03.2025, 11:46 AM CET