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The effects of political short-termism on transitions induced by pollution regulations

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  • Di Bartolomeo Giovanni
  • Saltari Enrico
  • Semmler Willi
Abstract
We study the dynamic problem of pollution control enacted by some policies of regulation and mitigation. The transition dynamics from one level of regulation and mitigation to another usually involve inter-temporal trade-offs. We focus on how different policymaker’s time horizons affect these trade-offs. We refer to shorter lengths in policymaker’s time horizons as political short-termism or inattention, which is associated with political econ-omy or information constraints. Formally, inattention is modeled by using Nonlinear Model Predictive Control. Therefore, it is a dynamic concept: our policymakers solve an inter-temporal decision problem with a finite horizon that involves the repetitive solution of an optimal control problem at each sampling instant in a receding horizon fashion. We find that political short-termism substantially affects the transition dynamics. It leads to quicker but costlier transitions. It also leads to an under-evaluation of the environmental costs that may accelerate climate change.

Suggested Citation

  • Di Bartolomeo Giovanni & Saltari Enrico & Semmler Willi, 2022. "The effects of political short-termism on transitions induced by pollution regulations," wp.comunite 00154, Department of Communication, University of Teramo.
    • Handle: RePEc:ter:wpaper:00154
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    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • P28 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Natural Resources; Environment
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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