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Investment subsidies and Time-Consistent Environmental Policy

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  • Lisandro Abrego
  • Carlo Perroni

Abstract

We describe a model of dynamic pollution abatement choices with heterogeneous agents where, due to the presence of a distributional objective and to the absence of incentive-compatible compensation mechanisms, the choice of a second-best level of emission taxation is time-inconsistent. In this model, we investigate whether investment subsidies can act as a substitute for policy commitment. Copyright 2002, Oxford University Press.

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Bibliographic Info

Article provided by Oxford University Press in its journal Oxford Economic Papers.

Volume (Year): 54 (2002)
Issue (Month): 4 (October)
Pages: 617-635

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Handle: RePEc:oup:oxecpp:v:54:y:2002:i:4:p:617-635

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  8. Francesco Ferrante, . "Induced Technical Change, Scientific Advance and the Efficient Control of Pollution," Discussion Papers 96/4, Department of Economics, University of York.
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  13. Fischer, Stanley, 1980. "Dynamic inconsistency, cooperation and the benevolent dissembling government," Journal of Economic Dynamics and Control, Elsevier, vol. 2(1), pages 93-107, May.
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Cited by:
  1. Dieter Helm & Cameron Hepburn & Richard Mash, 2003. "Time Inconsistent Environmental Policy and Optimal Delegation," Economics Series Working Papers 175, University of Oxford, Department of Economics.
  2. Yasunori Ouchida & Daisaku Goto, 2014. "Environmental Research Joint Ventures and Time-Consistent Emission Tax," Working Papers 2014.35, Fondazione Eni Enrico Mattei.
  3. Thierry Vignolo & Jacques Percebois & Agnes dArtigues, 2007. "The time-inconsistency of alternative energy policy," Economics Bulletin, AccessEcon, vol. 1(1), pages 1-7.
  4. Karp, Larry & Zhang, Jiangfeng, 2008. "Taxes Versus Quantities for a Stock Pollutant with Endogenous Abatement Costs and Asymmetric Information," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt84q0s8tb, Department of Agricultural & Resource Economics, UC Berkeley.
  5. Marsiliani, L. & Renstrom, T.I., 1999. "Time Inconsistency in Environmental Policy: Tax Earmarking as A Commitment Solution," Discussion Paper 1999-86, Tilburg University, Center for Economic Research.
  6. Alistair Ulph & David Ulph, 2011. "Optimal Climate Change Policies When Governments Cannot Commit," Discussion Paper Series, Department of Economics 201104, Department of Economics, University of St. Andrews.
  7. Raphael Calel, 2011. "Market-based instruments and technology choices: a synthesis," Grantham Research Institute on Climate Change and the Environment Working Papers 57, Grantham Research Institute on Climate Change and the Environment.
  8. Christophe Deissenberg & Herbert Dawid & Pavel Sevcik, 2004. "Cheap Talk, Gullibility, and Welfare in an Environmental Taxation Game," Working Papers 2004.137, Fondazione Eni Enrico Mattei.
  9. Alistair Ulph & David Ulph, 2013. "Optimal Climate Change Policies When Governments Cannot Commit," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 56(2), pages 161-176, October.
  10. Bouwe Dijkstra & Maria J. Gil-Moltó, 2014. "Is Emission Intensity or Output U-shaped in the Strictness of Environmental Policy," CESifo Working Paper Series 4833, CESifo Group Munich.
  11. Roques, F.A. & Nuttall, W.J. & Newbery, D.M., 2006. "Using Probabilistic Analysis to Value Power Generation Investments Under Uncertainty," Cambridge Working Papers in Economics 0650, Faculty of Economics, University of Cambridge.
  12. Grischa Perino, 2008. "The Design of Permit Schemes and Environmental Innovation," Working Papers 0467, University of Heidelberg, Department of Economics, revised Jun 2008.
  13. Taran Fæhn & Elisabeth Thuestad Isaksen, 2014. "Diffusion of climate technologies in the presence of commitment problems," Discussion Papers 768, Research Department of Statistics Norway.

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