Environmental Regulation Under Policy Persistence

Jinhua Zhao and Catherine Kling

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: We study the optimal emission standards under uncertain pollution damages and transaction costs associated with policy changes in a dynamic setting. We consider three alternative forms of transactions costs and show that they can lead to different kinds of delays of policy changes or smaller scales of these changes. Thus, policy persistence can be a rational response of forward-looking policy makers to future transaction costs, rather than an inefficient outcome of the current political process.

Date: 2003-01-01
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Published in Resource and Energy Economics 2003, vol. 25, pp. 255-68

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Persistent link: https://EconPapers.repec.org/RePEc:isu:genres:11444

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