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Legislative Organization and Pollution Taxation

Authors
  • Fredriksson, Per G.1
  • Millimet, Daniel L.2
  • 1 University of Louisville, Department of Economics, Louisville, KY, 40292, Kentucky , Louisville (United States)
  • 2 Southern Methodist University, Texas, USA , Texas (United States)
Type
Published Article
Journal
Public Choice
Publisher
Kluwer Academic Publishers-Plenum Publishers
Publication Date
Dec 09, 2006
Volume
131
Issue
1-2
Pages
217–242
Identifiers
DOI: 10.1007/s11127-006-9114-0
Source
Springer Nature
Keywords
License
Yellow

Abstract

The role of political institutions in shaping public policy has been analyzed in isolation from corruption, and legislative organization (specifically, bicameralism) has received minimal attention. We analyze pollution taxation when decisions are influenced by several veto players, such as legislative chambers. Our theory predicts that an increase in the number of veto players (e.g., moving from uni- to bi-cameralism) pushes the pollution tax towards the social optimum, with the effect being conditional on corruption. As such, dispersion around the optimal tax is lower under bicameralism. Empirical tests – using data from 86 countries – support the theory.

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