Democracy, Inequality and the Environment When Citizens Can Mitigate Privately or Act Collectively

37 Pages Posted: 15 Nov 2010

See all articles by Sophie Bernard

Sophie Bernard

CIRANO and École Polytechnique de Montréal; Polytechnique Montreal

Louis Hotte

University of Ottawa

Stanley L. Winer

Carleton University - School of Public Policy and Administration; Carleton University - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: November 15, 2010

Abstract

We study the political economy of the environment in autocratic, weak and strong democracies when individuals can either mitigate the health consequences of domestic pollution privately or reduce pollution collectively through public policy. The setting is that of a small open economy in which incomes depend importantly on trade in dirty goods, where income inequality and the degree to which ordinary citizens exert voice in each dimension of the policy process distinguishes elites and ordinary citizens. The recognition that the health consequences of pollution can be dealt with privately at a cost adds an important dimension to the analysis of the political economy of environmental regulation, especially for an open economy. When private mitigation is feasible, inequality of incomes leads to an unequal distribution of the health burden of pollution (in accordance with the epidemiologic evidence), thus polarizing the interests of citizens in democracies and of ordinary citizens and elites in non-democratic regimes. Inequality in the willingness to bear the cost of private mitigation in turn interacts with the pollution costs and income benefits of trade in dirty goods to further polarize interests concerning both environmental stringency and the regulation of trade openness. In this context, we show how the eco-friendliness ranking of different political regimes varies with the cost of private mitigation and with the extent of income inequality, tending to converge when mitigation costs are high, and even producing a ranking reversal between democracies and autocracies, and between weak and strong democracies, when costs lie in an intermediate range.

Keywords: pollution, environmental regulation, private mitigation, income inequality, democracy, trade, welfare, collective choice, political economy

JEL Classification: C70, D70, F18, Q56

Suggested Citation

Bernard, Sophie and Hotte, Louis and Winer, Stanley L., Democracy, Inequality and the Environment When Citizens Can Mitigate Privately or Act Collectively (November 15, 2010). CESifo Working Paper Series No. 3241. Available at SSRN: https://ssrn.com/abstract=1709275

Sophie Bernard

CIRANO and École Polytechnique de Montréal ( email )

2020 rue University, 25th floor
Montreal H3C 3J7, Quebec
Canada

Polytechnique Montreal ( email )

Montreal H3C 3A7, Quebec
Canada

Louis Hotte

University of Ottawa ( email )

Department of Economics
55 Laurier E.
Ottawa, Ontario K1N 6N5
Canada
+161 356 25800 1692 (Phone)
+161 356 25999 (Fax)

HOME PAGE: http://aix1.uottawa.ca/~lhott3/

Stanley L. Winer (Contact Author)

Carleton University - School of Public Policy and Administration ( email )

1125 Colonel By Drive
Ottawa, Ontario K1S 5B6
Canada
613-520-2600 x2630 (Phone)
613-520-2551 (Fax)

HOME PAGE: http://www.carleton.ca/winer

Carleton University - Department of Economics ( email )

1125 Colonel By Drive
Ottawa, Ontario K1S 5B6
Canada
613-520-2600 ex.2630 (Phone)
613-520-2551 (Fax)

HOME PAGE: http://www.carleton.ca/winer

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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