Transaction costs and agri-environmental policy measures: are preferences influencing policy implementation?

This paper investigates whether the level of transaction costs of a Swedish agri-environmental policy measure is attributable to technical factors or whether political factors, such as lobby groups and political majorities at the county level, influence the costs. A previous study indicated that political factors may influence the level of transaction costs, but the extreme bounds analysis performed in this paper reveals that those results are fragile. It shows that three of the technical variables are robust with respect to model specifications but that none of the political variables are. Thus, no evidence can be found that political factors influence the level of transaction costs.