Please use this identifier to cite or link to this item:
Anger, Niels
Böhringer, Christoph
Oberndorfer, Ulrich
Year of Publication: 
Series/Report no.: 
ZEW Discussion Papers 08-023
This paper presents a political-economy analysis of allowance allocation in the EU Emissions Trading Scheme (EU ETS). A common-agency model suggests that a politicalsupport maximizing government considers the preferences of sectoral interest groups besides public interest when allocating emissions permits. In the stylized model, industries represented by more powerful lobby groups face a lower regulatory burden, which for sufficiently high lobbying power leads to an inefficient emissions regulation. An empirical analysis of the first trading phase of the EU ETS corroborates our theoretical prediction for a cross-section of German firms, but also shows that the political-economy determinants of permit allocation depend on firm characteristics. We find that large carbon emitters that were heavily exposed to emissions regulation and simultaneously represented by powerful interest groups received higher levels of emissions allowances. In contrast, industrial lobbying power stand-alone or threats of potential worker layoffs did not exert a significant influence on the EU ETS allocation process.
Emissions trading
interest groups
regression analysis
Document Type: 
Working Paper

Files in This Item:
191.35 kB

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