Policy persistence in environmental regulation

Date
2003-01-01
Authors
Zhao, Jinhua
Kling, Catherine
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Altmetrics
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Research Projects
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Economics
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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.

Description

This is a working paper of an article from Resource and Energy Economics 25 (2003): 255, doi: 10.1016/S0928-7655(03)00031-9.

Keywords
transaction costs, uncertainty, learning
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