Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/70083
Authors: 
Michaelis, Peter
Ziesemer, Thomas
Year of Publication: 
2010
Series/Report no.: 
Volkswirtschaftliche Diskussionsreihe, Institut für Volkswirtschaftslehre der Universität Augsburg 314
Abstract: 
Strategic environmental policy games are usually based on simultaneous decision making and reach the conclusion that the policy choices are strategic substitutes. Empirical evidence, however, shows that the introduction of a regulatory instrument usually follows a consecutive pattern that is best described as policy diffusion. To introduce policy diffusion into to a strategic environmental policy game we transform the typical model setup into a Stackelberg game in which we analyze the policy decisions of two governments when one can commit to its choice. We find that the well-known trade-off between rent-seeking and the internalisation of negative externalities from pollution is mitigated when policy diffusion takes place.
Subjects: 
Strategic environmental policy
policy diffusion
emission tax
JEL: 
F18
D62
Q58
Document Type: 
Working Paper

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