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Buy Coal! A Case for Supply-Side Environmental Policy

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  • B�rd Harstad

Abstract

Free-riding is at the core of environmental problems. If a climate coalition reduces its emissions, world prices change and nonparticipants typically emit more; they may also extract the dirtiest type of fossil fuel and invest too little in green technology. The coalition’s second-best policy distorts trade and is not time consistent. However, suppose that the countries can trade the rights to exploit fossil-fuel deposits: As soon as the market clears, the above-mentioned problems vanish and the first-best is implemented. In short, the coalition’s best policy is to simply buy foreign deposits and conserve them.

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Bibliographic Info

Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 120 (2012)
Issue (Month): 1 ()
Pages: 77 - 115

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Handle: RePEc:ucp:jpolec:doi:10.1086/665405

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Citations

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Cited by:
  1. Markusen, James R., 2014. "Per-Capita Income as a Determinant of International Trade and Environmental Policies," CEPR Discussion Papers 9799, C.E.P.R. Discussion Papers.
  2. repec:pdn:wpaper:63 is not listed on IDEAS
  3. Taran Fæhn & Cathrine Hagem & Lars Lindholt & Ståle Mæland & Knut Einar Rosendahl, 2013. "Climate policies in a fossil fuel producing country. Demand versus supply side policies," Discussion Papers 747, Research Department of Statistics Norway.
  4. Mark Schopf & Hendrik Ritter, 2012. "Reassessing the Green Paradox," FEMM Working Papers 120013, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
  5. repec:pdn:wpaper:62 is not listed on IDEAS
  6. Eliasson , Jonas & Proost, Stef, 2014. "Is sustainable transport policy sustainable?," Working papers in Transport Economics 2014:2, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
  7. James R. Markusen, 2014. "Per-Capital Income as a Determinant of International Trade and Environment Policies," CESifo Working Paper Series 4618, CESifo Group Munich.
  8. Eskeland, Gunnar S., 2013. "Leadership in Climate Policy: Is there a case for Early Unilateral Unconditional Emission Reductions?," Discussion Papers 2013/6, Department of Business and Management Science, Norwegian School of Economics.
  9. Frederick van der Ploeg, 2013. "Cumulative Carbon Emissions and the Green Paradox," Annual Review of Resource Economics, Annual Reviews, vol. 5(1), pages 281-300, 06.
  10. Ngo Van Long, 2014. "The Green Paradox in Open Economies," CESifo Working Paper Series 4639, CESifo Group Munich.
  11. Bård Harstad, 2013. "The Market for Conservation and Other Hostages," CESifo Working Paper Series 4296, CESifo Group Munich.
  12. Mark Schopf, 2013. "Preserving Eastern or Offshore Oil for Preventing Green Paradoxes?," Working Papers CIE 63, University of Paderborn, CIE Center for International Economics.
  13. Paul Collier & Anthony J. Venables, 2014. "Closing coal: economic and moral incentives," Grantham Research Institute on Climate Change and the Environment Working Papers 157, Grantham Research Institute on Climate Change and the Environment.
  14. Hoel, Michael, 2013. "Supply Side Climate Policy and the Green Paradox," Memorandum 03/2013, Oslo University, Department of Economics.
  15. Hendrik Ritter & Mark Schopf, 2013. "Unilateral Climate Policy: Harmful or even Disastrous?," Working Papers CIE 62, University of Paderborn, CIE Center for International Economics.
  16. Schmidt, Robert C. & Heitzig, Jobst, 2014. "Carbon leakage: Grandfathering as an incentive device to avert firm relocation," Journal of Environmental Economics and Management, Elsevier, vol. 67(2), pages 209-223.
  17. Michael Hoel, 2013. "Supply Side Climate Policy and the Green Paradox," CESifo Working Paper Series 4094, CESifo Group Munich.

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