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Legislative Organization and Pollution Taxation

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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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Authors and Affiliations

  1. Department of Economics, University of Louisville, Louisville, KY, 40292, Kentucky

    Per G. Fredriksson

  2. Southern Methodist University, Texas, USA

    Daniel L. Millimet

Authors
  1. Per G. Fredriksson
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  2. Daniel L. Millimet
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Correspondence to Per G. Fredriksson.

Additional information

JEL Codes: D72, D78, H20, Q28

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Fredriksson, P.G., Millimet, D.L. Legislative Organization and Pollution Taxation. Public Choice 131, 217–242 (2007). https://doi.org/10.1007/s11127-006-9114-0

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  • DOI: https://doi.org/10.1007/s11127-006-9114-0

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