Pollution for Sale: Firms’ Characteristics and Lobbying Outcome

We consider how the attributes of individual firms may influence the lobbying outcome concerning the setting of the stringency of a costly environmental regulation. We show that when there is a strong asymmetry between firms, a clean firm may lobby to strengthen the regulation, while its dirty rival...

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Bibliographic Details
Published in:Environmental & resource economics 2020-11, Vol.77 (3), p.539-564
Main Authors: Cai, Dapeng, Li, Jie
Format: Article
Language:English
Subjects:
Economic Policy
Economics
Economics and Finance
Environmental Economics
Environmental Law/Policy/Ecojustice
Environmental Management
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Summary:We consider how the attributes of individual firms may influence the lobbying outcome concerning the setting of the stringency of a costly environmental regulation. We show that when there is a strong asymmetry between firms, a clean firm may lobby to strengthen the regulation, while its dirty rival lobbies to weaken the regulation. Moreover, the lobbying process is asymmetric in that the clean firm finds it more difficult to reach its objectives: although only a sufficiently large clean firm can succeed in strengthening regulation, a relatively small dirty firm can successfully bend a regulation toward its own interest.
ISSN:0924-6460
1573-1502
DOI:10.1007/s10640-020-00507-z