Environmental Policy

Who Killed the Electric Car? Consumers Oil companies Auto manufactures Government

The Environment and Political Economy How does this all relate to the political economy approach? Kraft: “Politics is about the collective choices we make as a society”

How political economists think: –They think incentives matter –They think about trade offs –They think in the aggregate –They believe non-decisions are important –They believe in the power of markets –They believe that people are selfish and that is not always bad

Incentives and Constraints What type of policies would influence the incentives faced by consumers & producers? What type of policies would influence the constraints faced by consumers & producers?

Example: Fuel Efficient Cars It will be the market that produces fuel efficient cars, not the government But the market will not produce them because it loves the environment Producers will make them if there is a profit for them Consumers will buy them if the cost is competitive.

What type of policies? Incentives –Gas taxes, taxes on cars –Tax rebates –Research grants Constraints –Regulations –Enforcement –Product bans

Revisit Kraft Policy Analysis Policy Implementation Policy Evaluation