Endogenous Lobby Formation and Endogenous Environmental Protection with Unilateral Tariff Reduction

Shinya Kawahara ()

Environmental & Resource Economics, 2014, vol. 57, issue 1, 57 pages

Abstract: This paper studies how one country’s decision to liberalize trade affects the political economic structure that determines environmental policy in another country. By constructing a political economy model in which the formation of lobby groups and environmental policy are endogenously determined, we show that unilateral tariff reductions by a large country importing a polluting good will generate a lobby group with a relatively lower cost of organization in a small country exporting that good. A formulated lobby demands an inefficient environmental policy, and hence, the small country’s environmental regulations become less efficient. Then, we show that when a lobby already exists, unilateral tariff reductions result in the formation of a rival lobby and consequently make the small country’s environmental policy more efficient. Copyright Springer Science+Business Media Dordrecht 2014

Keywords: Environmental policy; Lobbying; Political economy; Pollution tax; Trade and environment; F18; D72; Q56; Q58 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (5)

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DOI: 10.1007/s10640-013-9658-7

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