Please use this identifier to cite or link to this item: http://hdl.handle.net/1893/1197
Appears in Collections:Economics Working Papers
Peer Review Status: Unrefereed
Title: The effects of rent seeking over tradable pollution permits
Author(s): Hanley, Nicholas
Mackenzie, Ian A
Contact Email: imackenzie@ethz.ch
Citation: Hanley N & Mackenzie IA (2009) The effects of rent seeking over tradable pollution permits. Stirling Economics Discussion Paper, 2009-12.
Keywords: tradable permit market
rent seeking
initial allocation
Environmental permits
Environmental management
Rent (Economic theory)
JEL Code(s): D72: Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
D78: Positive Analysis of Policy Formulation and Implementation
Q53: Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
Issue Date: 1-May-2009
Date Deposited: 18-May-2009
Series/Report no.: Stirling Economics Discussion Paper, 2009-12
Abstract: The establishment of a tradable permit market requires the regulator to select a level of aggregate emissions and then distribute the associated permits (rent) to specific groups. In most circumstances, these decisions are often politically contentious and frequently influenced by rent seeking behaviour. In this paper, we use a contest model to analyse the effects of rent seeking effort when permits are freely distributed (grandfathered). Rent seeking behaviour can influence both the share of permits which an individual firm receives and also the total supply of permits. This latter impact depends on the responsiveness of the regulator to aggregate rent seeking effort. Using a three-stage game, we show that rent seeking can influence both the distribution of rents and the ex post value of these rents, whilst welfare usually decreases in the responsiveness of the regulator.
Type: Working Paper
URI: http://hdl.handle.net/1893/1197
Affiliation: Economics
University of Stirling

Files in This Item:
File Description SizeFormat 
SEDP-2009-12-Hanley-McKenzie.pdfFulltext - Accepted Version240.47 kBAdobe PDFView/Open



This item is protected by original copyright



Items in the Repository are protected by copyright, with all rights reserved, unless otherwise indicated.

The metadata of the records in the Repository are available under the CC0 public domain dedication: No Rights Reserved https://creativecommons.org/publicdomain/zero/1.0/

If you believe that any material held in STORRE infringes copyright, please contact library@stir.ac.uk providing details and we will remove the Work from public display in STORRE and investigate your claim.