Efficient Management of Insecure Fossil Fuel Imports through Taxing (!) Domestic Green Energy?
AbstractA small open economy produces a consumer good, green and black energy, and imports fossil fuel at an uncertain price. Unregulated competitive markets are shown to be inefficient. The implied market failures are due to the agents’ attitudes toward risk, to risk shifting and the uniform price for both types of energy. Under the plausible assumptions that consumers are prudent and at least as risk averse as the producers of black energy, the risk can be efficiently managed by taxing emissions and green energy. The need to tax (!) green energy contradicts the widespread view that subsidization of green energy is an appropriate means to enhance energy security in countries depending on risky fossil fuel imports.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3062.
Date of creation: 2010
Date of revision:
price uncertainty; black energy; green energy; fossil fuel;
Other versions of this item:
- Thomas Eichner & Rüdiger Pethig, 2009. "Efficient management of insecure fossil fuel imports through taxing (!) domestic green energy?," Volkswirtschaftliche DiskussionsbeitrÃ¤ge 138-09, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht.
- F18 - International Economics - - Trade - - - Trade and Environment
- Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
- Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
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