Lobbying for Emissions Allowances: A New Perspective on the Political Economy of the US Acid Rain Program

Julien Hanoteau

Rivista di Politica Economica, 2003, vol. 93, issue 1, 289-314

Abstract: This paper shows empirically that the choice between auction and grandfathering for the distribution of pollution permits is not neutral in presence of political market failures as it motivates rent-seeking. We model the distribution of free permits in the US sulfur emissions trading system as an endogenous sharing rule and we test this relation using PAC contribution as a measure of political influence. We find that shareholder interests of the US power sector influenced the distribution of permits as they were motivated by a windfall gain despite profit regulation in their sector and thanks to a climate of regulatory uncertainty when the law was discussed.

JEL-codes: D72 H11 K32 L51 P16 Q28 (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (8)

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