Pollution Abatement Investment When Firms Lobby Against Environmental Regulation

Arbeitspapier

In this paper, we study a firm's optimal lobby behavior and its effect on investment in pollution abatement capital. We develop a dynamic framework where a representative firm can invest in both abatement and lobby capital in response to a possible future increase in pollution tax. We show that when the firm lobbies against the scale of the tax increase at a predetermined date, it should act like an occasional lobbyer by investing a lump-sum (optimal) amount in the lobby capital only at that date. But, to delay the new tax, it should act like a habitual lobbyer by investing continuously and at increasing rates over an optimal time period. We show that lobby expenditure crowds out investment in abatement capital and that this effect is stronger the more efficient is the lobbying activity. Further, we show that while uncertainty about the magnitude of the tax reduces the firm's incentive to lobby, uncertainty about the timing of the new tax increases it.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Nota di Lavoro ; No. 82.2003

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Fiscal Policies and Behavior of Economic Agents: Firm ; Criteria for Decision-Making under Risk and Uncertainty ; Renewable Resources and Conservation: Government Policy
• Thema: Pollution Abatement ; Environmental Regulation ; Umweltschutzinvestition ; Interessenpolitik ; Umweltpolitik ; Theorie

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Farzin, Y. Hossein ; Zhao, Jinhua
• Ereignis: Veröffentlichung
• (wer): Fondazione Eni Enrico Mattei (FEEM)
• (wo): Milano
• (wann): 2003

Weitere Informationen

• Handle: http://hdl.handle.net/10419/118107
• Letzte Aktualisierung: 10.03.2025, 11:43 MEZ