Browse > Article
http://dx.doi.org/10.15266/KEREA.2018.27.4.725

Environmental Policy and the Political Economy of Energy Subsidies  

Lee, Soo-Cheol (Department of Economics, Meijo University)
Lee, Myunghun (Department of International Trade, Inha University)
Publication Information
Environmental and Resource Economics Review / v.27, no.4, 2018 , pp. 725-743 More about this Journal
Abstract
Industrial groups (representing the polluters) and environmental non-governmental organizations (representing the victims) respond differently to various environmental policy instruments. As the affected group's power is large either politically or economically, it is unlikely that a single instrument will be actually selected despite being effective or efficient because of the high political costs associated with it. In this paper, we focus on the political role that energy subsidies play in creating a compromise between energy consuming polluters and victims of pollution. The use of a Dolbear (1967)'s triangle Edgeworth box model makes it possible to examine how policy selection affects the income distribution and welfare levels of two groups. The effects of a single policy instrument of either direct regulation or tax are compared with those of a policy mix that includes energy subsidies. We found that the addition of energy subsidies would increase the chance of compromise between polluters and victims.
Keywords
Polluters/Victims; Political Power; Energy Subsidies; Triangle Edgeworth Box;
Citations & Related Records
연도 인용수 순위
  • Reference
1 Lee, S., H. Pollitt, and K. Ueta, "An Assessment of Japanese Carbon Tax Reform Using the E3MG Econometric Model," Scientific World Journal, 835917, 2012, pp. 1-9.
2 Lee, S., Theory and Practice of Environmental Subsidy (in Japanese), Nagoya: Nagoya University Press, 2004.
3 OECD, Taxation, Innovation and the Environment, Policy Brief, 2010. http://www.oecd.org/environment/tools-evaluation/48178034.pdf.
4 Opschoor, J., Economic Instruments for Environmental Protection in the Netherlands, OECD, 1986.
5 Oyama, A., "Internality and Existence of Third Party,"Economic Magazine (in Japanese), 1998, pp. 129-143.
6 Baumol, W.J. and W.E. Oates, The Theory of Environmental Policy, Cambridge: Cambridge University Press, 1988.
7 Baumol, W.J., W.E Oates, and S.A.B. Blackman, Economics, Environmental Policy, and the Quality of Life, NJ: Prentice-Hall, 1979.
8 Buchanan, J. and G. Tullok, "Polluters Profits and Political Response: Direct Controls versus Taxes," American Economic Review, Vol. 65, 1975, pp. 139-147.
9 Coase, R., "The Problem of Social Cost," Journal of Law and Economics, Vol. 3, 1960, pp. 1-44.   DOI
10 Dolbear, F.T., "On the Theory of Optimum Externality," American Economic Review, Vol. 57, 1967, pp. 90-103.
11 Dunlap, R.E. and A.G. Mertig, American Environmentalism: The US Environmental Movement, 1970-1990, Abingdon: Taylor and Francis, 1992.
12 Hahn, R.W., "The Political Economy of Environmental Regulation: Towards a Unifying Framework," Public Choice, Vol. 65, 1990, pp. 21-47.   DOI
13 Turner, R.K., D. Pearce, and I. Bateman, Environmental Economics: An Elementary Introduction, Baltimore, MD: Johns Hopkins University Press, 1993.
14 Young, M.D., Sustainable Investment and Resource Use, UNESCO, 1992.
15 Pigou, A.C., The Economics of Welfare, London: Macmillan, 1920.
16 Green Fiscal Commission, The Case for Green Fiscal Reform-Final Report of the UK, 2009. http://www.greenfiscalcommission.org.uk/images/uploads/GFC_FinalReport.pdf.
17 Hahn, R.W., "Economic Prescriptions for Environmental Problems: How the Patient Followed the Doctor's Orders," Journal of Economic Perspectives, Vol. 3, 1989, pp. 95-114.   DOI
18 Hamamoto, M., "Process of Environmental Policy Determination," International Public Economy Studies, Vol. 8, 1998, pp. 26-33.
19 Hamamoto, M., Political Economy of Emission Trading Scheme (in Japanese), Tokyo: Yuhikaku, 2008.
20 IEA, World Energy Outlook 2015 Special Report: Energy and Climate Change/ on the Case Studies of Energy Subsidies for Some Selected Countries of the World, 2015. http://www.iea.org/publications/freepublications/publication/WEO2015SpecialReportonEnergyandClimateChange.pdf.
21 Keohane, N.O., R.L. Revesz, and R.N. Stavins, "The Positive Political Economy of Instrument Choice in Environmental Policy," in A. Panagariya, P. Portney, and R. Schwab (eds.), Environmental and public economics: Essays in honor of Wallace E. Oates, pp. 89-125, Cheltenham: Edward Elgar, 1999.
22 Lee, S., "Comparative Analysis of Institutional Designs and Policy Processes toward the Introduction of Emissions Trading Systems in Japan and Korea," in T. Morotomi (ed.), Low Carbon Development and Low Carbon Society, Tokyo: United Nations University Press, 2014.
23 Lee, S., "Environmental Subsidies by Fiscal Investment and Loan in Japan," The Research and Studies (in Japanese), Vol. 18, 1998. pp. 15-31.