Lobbying Against Environmental Regulation vs. Lobbying for Loopholes
U of Zurich, Socioeconomic Institute Working Paper No. 0301
36 Pages Posted: 13 Mar 2003
Date Written: January 2003
We analyze the determinants of environmental policy when two firms engage in two types of lobbying against a restriction on allowed pollution: General lobbying increases the total amount of allowed pollution, which is beneficial for both firms. Private lobbying increases the individual pollution standard of the lobbying firm, but has a negative or zero effect on the allowed emissions of the competitor. We determine the lobbying equilibrium and discuss the resulting emission level. In many cases, a higher effectiveness of private lobbying is detrimental for firms and beneficial for environmental quality, as it induces firms to turn towards excessive amounts of relatively unproductive private lobbying.
Keywords: Environmental Regulation, Pollution Standards, Interest Groups, Lobbying, Policy Making
JEL Classification: D72, D78, L51
Suggested Citation: Suggested Citation