Lobbying over exhaustible-resource extraction

Achim Voß and Mark Schopf

European Economic Review, 2021, vol. 135, issue C

Abstract: In a dynamic model of natural-resource extraction, we characterize the extraction path that is chosen by a government which is lobbied by natural-resource suppliers. The lobby group pays the government in exchange for a favorable policy. We show how the development of payments relates to the development of a conflict of interest between profit maximization and welfare maximization. The agreed extraction reflects the resource owners preference for supply restrictions that keep up the price and the government’s preference for avoiding flow-pollution damages. Due to stock-pollution damages, the government prefers a lower level of total extraction than the lobby group. Resource extraction decreases monotonically. Lobby payments do not necessarily do so, but they decrease in the long run.

Keywords: Environmental policy; Exhaustible resources; Lobbying; Political economy; Time consistency (search for similar items in EconPapers)
JEL-codes: D72 Q31 Q38 Q58 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Lobbying over Exhaustible-Resource Extraction (2017)
Working Paper: Lobbying over Exhaustible-Resource Extraction (2016)
Working Paper: Lobbying over Exhaustible-Resource Extraction (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:135:y:2021:i:c:s0014292121000933

DOI: 10.1016/j.euroecorev.2021.103740

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