Announcing Climate Policy: Can a Green Paradox Arise without Scarcity?
AbstractUnintended consequences of a pre-announced climate policy have been studied in a variety of situations. We show that early announcement of a carbon tax gives rise to a “Green-Paradox,” in that it increases polluting emissions in the interim period (between announcement and actual implementation), irrespective of the scarcity of fossil fuels. The phenomenon holds both when the announced implementation date is taken as a credible threat and when households are skeptical about the (political) will or capability of the government to implement the policy as announced. The paradoxical outcome is driven by consumption-saving tradeoffs facing households who seek to smooth consumption over time.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3307.
Date of creation: 2010
Date of revision:
climate policy; carbon tax; green paradox; uncertainty;
Other versions of this item:
- Smulders, Sjak & Tsur, Yacov & Zemel, Amos, 2012. "Announcing climate policy: Can a green paradox arise without scarcity?," Journal of Environmental Economics and Management, Elsevier, vol. 64(3), pages 364-376.
- Smulders, Sjak A. & Tsur, Y. & Zemel, A., 2010. "Announcing climate policy: Can a green paradox arise without scarcity?," Open Access publications from Tilburg University urn:nbn:nl:ui:12-4500307, Tilburg University.
- Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
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