Environmental policy formation is an iterative process which reflects the decisions and interaction of numerous individuals and groups. Our purpose in this paper is to interpret the passage and implementation of the 1970 Clean Air Act in the context of a positive theory of the formation of policy based on the economic self-interest of important actors. We argue that the selfinterest of the individuals responsible for developing legislative framework of the Clean Air Act and those involved in implementing it must be taken into account in analyzing policy making. Specifically, a meaningful analysis must include the self-interest of politicians, bureaucrats, firm managers, and Citizen Interest Group (CIG) leaders.
We view each individual as having a goal function which summarizes his preferences for alternatives. Choices will be made to further these goals. However, the individual is constrained in his choices by income and costs. Costs are in part a function of the institutional structure. The goals one has may be both pecuniary and non-pecuniary. Of the latter, ideological variables such as an individual's view of the "public interest" may be an important consideration.
In this paper we describe the revealing objective function and constraints faced by the principal actors in the passage and implementation of the Clean Air Act of 1970. Use of the self-interest paradigm points out the importance of the institutional structure created in the Act and also how institutional modifications have emerged from the implementation process. An understanding of the behavioral incentives imposed by the 1970 Act will aid in predicting the outcome of future laws and regulations. This perspective is especially beneficial in evaluating the Clean Air Act of 1977.
Section 1 specifies the constrained maximization problem of the politician, bureaucrat, firm manager, and CIG leader. Each is viewed as acting rationally to maximize his self-interest by making "trades" and "striking bargains" with politically interested groups or individuals. The quid pro quo is in terms of votes, campaign contributions in dollars, and various "in-kind" transfers. Section 2 focuses on the debate and passage of the 1970 Act and discusses the motivation of various actors. Section 3 uses the self-interest paradigm to