What's the damage? Environmental regulation with policy‐motivated bureaucrats

Achim Voß and Jörg Lingens

Journal of Public Economic Theory, 2018, vol. 20, issue 4, 613-633

Abstract: In choosing environmental policy, governments rely on information provided by bureaucrats, who may have a political motivation of their own. We analyze the ensuing principal–agent relationship and derive the government's optimal contract. We find that a regulatory agent who is more environmentalist than the government is rewarded for truthfully stating that the environmental impact of the regulated economic activity is low (and vice versa). The bureaucrat has a stronger influence on policy if there is greater uncertainty about the environmental impact, or if the policy choice has a strong weight in his utility function. For some impact values, the bureaucrat is permitted to set his own preferred policy, which is a form of optimal delegation.

Date: 2018
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Citations: View citations in EconPapers (2)

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https://doi.org/10.1111/jpet.12299

Related works:
Working Paper: What’s the Damage? Environmental Regulation with Policy-Motivated Bureaucrats (2014)
Working Paper: What’s the Damage? Environmental Regulation with Policy-Motivated Bureaucrats (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:bla:jpbect:v:20:y:2018:i:4:p:613-633

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