Democracy,inequality and the environment when citizens can mitigate health consequences of pollution privately or act collectively |
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| Institution: | 1. Polytechnique Montréal, C.P. 6079, succ. Centre-Ville, Montréal, QC H3C 3A7, Canada;2. CIRANO, Montréal, QC, Canada;3. Department of Economics, University of Ottawa, Ottawa, ON K1N 6N5, Canada;4. School of Public Policy and Administration, Department of Economics, Carleton University, Ottawa, ON K1S 5B6, Canada;5. CESifo, Munich, Germany;1. Ifo Institute — Leibniz-Institute for Economic Research at the University of Munich, Poschingerstr. 5, D-81679 Munich. Germany;2. University of Erlangen-Nuremberg, Department of Economics, Lange Gasse 20, 90403 Nuremberg, Germany;1. Comisión Federal para la Protección contra Riesgos Sanitarios (COFEPRIS), Monterrey 33, Colonia Roma, Delegación Cuauhtémoc, México City 06700, Mexico;2. Claremont Graduate University, Division of Politics and Economics, School of Social Science, Policy and Evaluation, 150 East Tenth Street, Claremont, CA 91711, United States |
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| Abstract: | We study the political economy of the environment in autocratic, weak and strong democracies when individuals can mitigate the health consequences of domestic pollution privately as well as control pollution collectively through public policies. We consider a small open economy with comparative advantage in dirty goods. With costly private mitigation, income inequality leads to an unequal distribution of the burdens of pollution (in accordance with the evidence). We show that the eco-friendliness ranking of political regime types varies with the cost of private mitigation and that increased inequality has non-monotonous effects on equilibrium pollution levels. In weak democracies, the political equilibrium may be characterized by low environmental standards but highly restricted trade, thus leading to ambiguous outcomes regarding pollution levels. |
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