19 Pages Posted: 17 Jun 2013
Date Written: 2012
We examine the relationship between voter preferences and political party platforms with respect to the regulation of externalities from private transactions. We begin with the argument that electoral rules, in particular those that determine whether voters focus on individual candidates or parties, are an important element of whether party platforms focus on targeting policies for specific constituency groups or for more diffuse societal benefits. To get their preferred policies, party elites must obtain and retain the support of a legislative majority; these dual goals require them to structure party platforms to appeal to both voters and incumbent legislators in their coalition. Which voters they target and how they win incumbents' support depends on electoral rules: candidate-centered rules motivate parties to target policy goals toward specific constituencies, while party-centered rules make it more attractive to tout policy meant to benefit broader constituencies. We formalize our argument, then test it using data on environmental regulation in the US and elsewhere. Environmental regulation is a particularly apt policy area for this study because the immediate benefits from exploiting natural resources accrue to property owners and extracting companies, while costs generally accrue to property owners and to society at large. While the costs to the property owners normally are internalized in the extraction contract, the diffuse costs are externalities that are internalized only to the extent that they are covered by government regulation. We thus expect greater environmental regulation where electoral rules focus voter attention on parties rather than individual candidates, independent of the true preferences of voters for or against regulation. While many existing studies have argued that some countries enact more regulations because of public support for environmental regulation, we argue that electoral institutions also play an important and conceptually independent role in understanding the regulatory variation across countries.
Suggested Citation: Suggested Citation
Heller, William and Holahan, Robert, An Institutional Theory of Public Bads Regulation: Political Parties, Electoral Rules, and Environmental Policy (2012). EPSA 2013 Annual General Conference Paper 681. Available at SSRN: https://ssrn.com/abstract=2225047