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Announcing climate policy: Can a green paradox arise without scarcity?

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  • Smulders, Sjak A.

    (Tilburg University)

  • Tsur, Y.
  • Zemel, A.

Abstract

Unintended consequences of a pre-announced climate policy are studied within a framework that allows for competition between polluting and clean energy sources. We show that early announcement of a carbon tax gives rise to a “green-paradox,” in that it increases emissions in the interim period (between announcement and actual implementation), irrespective of the scarcity of fossil fuels. The paradoxical outcome is driven by consumption-saving tradeoffs facing households who seek to smooth consumption over time and 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.

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Bibliographic Info

Paper provided by Tilburg University in its series Open Access publications from Tilburg University with number urn:nbn:nl:ui:12-4500307.

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Date of creation: 2010
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Handle: RePEc:ner:tilbur:urn:nbn:nl:ui:12-4500307

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Web page: http://www.tilburguniversity.edu/

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  1. Frederick van der Ploeg & Cees Withagen, 2010. "Is there really a Green Paradox?," Tinbergen Institute Discussion Papers, Tinbergen Institute 10-020/3, Tinbergen Institute, revised 27 Aug 2012.
  2. Di Maria, C. & Werf, E.H. van der, 2005. "Carbon Leakage Revisited: Unilateral Climate Policy with Directed Technical Change," Discussion Paper, Tilburg University, Center for Economic Research 2005-68, Tilburg University, Center for Economic Research.
  3. Corrado Di Maria & Sjak Smulders & Edwin van der Werf, 2008. "Absolute Abundance and Relative Scarcity: Announced Policy, Resource Extraction, and Carbon Emissions," Working Papers, Fondazione Eni Enrico Mattei 2008.92, Fondazione Eni Enrico Mattei.
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Cited by:
  1. Wirl, Franz, 2014. "Taxes versus permits as incentive for the intertemporal supply of a clean technology by a monopoly," Resource and Energy Economics, Elsevier, Elsevier, vol. 36(1), pages 248-269.
  2. Darko Jus & Volker Meier, 2012. "Announcing is Bad, Delaying is Worse: Another Pitfall in Well-Intended Climate Policy," CESifo Working Paper Series 3844, CESifo Group Munich.
  3. Corrado Di Maria & Ian Lange & Edwin van der Werf, 2012. "Should We Be Worried About the Green Paradox? Announcement Effects of the Acid Rain Program," Working Papers, Fondazione Eni Enrico Mattei 2012.49, Fondazione Eni Enrico Mattei.
  4. Frederick van der Ploeg & Cees Withagen, 2013. "Global Warming and the Green Paradox," OxCarre Working Papers, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford 116, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
  5. Partha Sen, 2013. "Unilateral Emission Cuts And Carbon Leakages In A North-South Trade Model," Working papers, Centre for Development Economics, Delhi School of Economics 232, Centre for Development Economics, Delhi School of Economics.
  6. Hart, Rob & Spiro, Daniel, 2011. "The elephant in Hotelling's room," Energy Policy, Elsevier, Elsevier, vol. 39(12), pages 7834-7838.
  7. Bahel, Eric & Marrouch, Walid & Gaudet, Gérard, 2013. "The economics of oil, biofuel and food commodities," Resource and Energy Economics, Elsevier, Elsevier, vol. 35(4), pages 599-617.
  8. Smulders, Sjak & Withagen, Cees, 2012. "Green growth -- lessons from growth theory," Policy Research Working Paper Series 6230, The World Bank.

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