nep-res New Economics Papers
on Resource Economics
Issue of 2008‒07‒20
two papers chosen by
Maximo Rossi
Universidad de la Republica

  1. Public Interest vs. Interest Groups: Allowance Allocation in the EU Emissions Trading Scheme By Anger, Niels; Böhringer, Christoph; Oberndorfer, Ulrich
  2. Does Mandatory Labeling of Genetically Modified Food Grant Consumers the Right to Know? Evidence from an Economic Experiment By Dannenberg, Astrid; Scatasta, Sara; Sturm, Bodo

  1. By: Anger, Niels; Böhringer, Christoph; Oberndorfer, Ulrich
    Abstract: This paper presents a political-economy analysis of allowance allocation in the EU Emissions Trading Scheme (EU ETS). A common-agency model suggests that a politicalsupport maximizing government considers the preferences of sectoral interest groups besides public interest when allocating emissions permits. In the stylized model, industries represented by more powerful lobby groups face a lower regulatory burden, which for sufficiently high lobbying power leads to an inefficient emissions regulation. An empirical analysis of the first trading phase of the EU ETS corroborates our theoretical prediction for a cross-section of German firms, but also shows that the political-economy determinants of permit allocation depend on firm characteristics. We find that large carbon emitters that were heavily exposed to emissions regulation and simultaneously represented by powerful interest groups received higher levels of emissions allowances. In contrast, industrial lobbying power stand-alone or threats of potential worker layoffs did not exert a significant influence on the EU ETS allocation process.
    Keywords: Emissions trading, interest groups, regression analysis
    JEL: C10 P16 Q58
    Date: 2008
  2. By: Dannenberg, Astrid; Scatasta, Sara; Sturm, Bodo
    Abstract: Opponents of the voluntary labeling scheme for genetically modified (GM) food products often argue that consumers have the “right to know” and therefore advocate mandatory labeling. In this paper we argue against this line of reasoning. Using experimental auctions conducted with a sample of the resident population of Mannheim, Germany, we show that the quality of the informational signal generated by a mandatory labeling scheme is affected by the number of labels in the market. If there are two labels, one for GM products and one for non-GM products, mandatory and voluntary labeling schemes generate a similar degree of uncertainty about the quality of products that do not carry a label.
    Keywords: labeling, genetically modified foods, consumer preferences, experimental auctions
    JEL: C91 Q18 Q51
    Date: 2008

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