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Is there a green paradox?

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Author Info

  • Hoel, Michael

    ()
    (Dept. of Economics, University of Oslo)

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    Abstract

    A sufficiently rapidly rising carbon tax may increase near-term emissions compared with the case of no carbon tax. Even so, such a carbon tax path may reduce total costs related to climate change, since the tax may reduce total carbon extraction. A government cannot commit to a speci.c carbon tax rate in the distant future. For reasonable assumptions about expectation formation, a higher present carbon tax will reduce near-term carbon emissions. Moreover, whatever the expectations about future tax rates are, near-term emissions will decline for a sufficiently high carbon tax. However, if the near-term tax rate for some reason is set below its optimal level, increased concern for the climate may change taxes in a manner that increases near-term emissions.

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    File URL: https://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2010/Memo-13-2010.pdf
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    Bibliographic Info

    Paper provided by Oslo University, Department of Economics in its series Memorandum with number 13/2010.

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    Length: 26 pages
    Date of creation: 03 Jan 2011
    Date of revision:
    Handle: RePEc:hhs:osloec:2010_013

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    Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
    Phone: 22 85 51 27
    Fax: 22 85 50 35
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    Web page: http://www.oekonomi.uio.no/indexe.html
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    Related research

    Keywords: climate change; exhaustible resources; green paradox; carbon tax;

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    References

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    1. Frederick van der Ploeg & Cees Withagen, 2010. "Is there really a Green Paradox?," Tinbergen Institute Discussion Papers 10-020/3, Tinbergen Institute, revised 27 Aug 2012.
    2. Alain Ayong Le Kama & Mouez Fodha & LAFFORGUE Gilles, 2009. "Optimal Carbon Capture and Storage policies," LERNA Working Papers 09.24.300, LERNA, University of Toulouse.
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