the local ecosystem if foreign species are introduced. Second, economic interest groups view IS
regulations as a way to increase private rents. The supply of IS regulation is provided by policy
makers empowered to erect barriers against products containing invasive species.
Consumers’ Interest in IS Regulation: Given the political boundaries of IS regulation, we begin
with a social planner’s objective function the state level. Consider first a state government’s
policy choices, developed in response to consumer, environmental, and producer interest groups
(stakeholder) in a state. Let the state’s representative consumer demand a combination of
agricultural commodities (food products) and environmental amenities. The indirect utility
function of the consumer can be characterized as, V [p(L), Y, L , I], where p is the unit price of
the agricultural good(s) or seed(s) impacted by IS regulation; L is the size or stringency of the
state noxious weed list; Y is the representative consumer’s income; and I is a vector describing
the state’s ecosystem. Consumer price p is positively related to the stringency of regulation
represented by the weed list’s size, L. In other words, if IS regulation becomes stringent, the
production cost of agricultural goods impacted by the regulation rises and therefore, agricultural
or food price also increases. Regulatory stringency, L, is also a direct argument in the indirect
utility function because consumers have ecosystem preferences independent of their food
consumption interests. An example of consumers’ ecosystem preference is the aversion towards
weeds that are fire hazards (e.g., cheat grass) or cause allergies (e.g., ragweed).
The total effect of increasing L on the representative consumer in a state is found by
differentiating V with respect to L:
(1)
dV = ∂ V ∂p + ∂ V
dL ∂p ∂L ∂L
We refer to the first right-hand-side term in equation (1) as the market-price effect. Economic
theory suggests that ∂V / ∂p is negative. However, ∂p / ∂L is positive because stringent weed