Measuring regulatory errors from environmental policy uncertainty

Ana Espinola-Arredondo, Felix Munoz-Garcia and Dolores Garrido ()
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Dolores Garrido: Union College

Journal of Regulatory Economics, 2023, vol. 64, issue 1, No 3, 48-65

Abstract: Abstract We examine an environmental policy which may be revisited by a new administration. We allow for pollution to be persistent over time and for uncertainty in next period's environmental policy. When pollution is non-persistent, we show that regulatory uncertainty is inconsequential for output, pollution, or emission fees. However, when pollution is persistent, we find that a more likely reelection of a stringent administration has the unintended (positive) consequence of reducing current pollution. We also measure the inefficiencies stemming from ignoring pollution persistence and from policy uncertainty, identifying in which contexts they are severe or negligible.

Keywords: Environmental policy; Pollution persistence; Policy uncertainty; Inefficiencies (search for similar items in EconPapers)
JEL-codes: L13 L51 Q58 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s11149-023-09464-z

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