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Competitive trilateral lobbying for and against subsidizing green energy

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Abstract

A small open economy operates a carbon emission trading scheme and subsidizes green energy. Taking cap-and-trade as given, we seek to explain the subsidy as the outcome of a trilateral tug of war between the ‘green’ energy industry, the ‘black’ energy industry and consumers. With parametric functions we fully solve the competitive economic equilibrium and the lobbying Nash equilibrium. We show how the resultant subsidy depends on the political influence of all three lobbying groups and we trace its determinants. Whether consumers have ‘green preferences’ turns out to be crucial for the results.

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File URL: http://www.wiwi.uni-siegen.de/vwl/repec/sie/papers/150-11.pdf
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Bibliographic Info

Paper provided by Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht in its series Volkswirtschaftliche Diskussionsbeiträge with number 150-11.

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Length: 27 pages
Date of creation: 2011
Date of revision:
Handle: RePEc:sie:siegen:150-11

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Related research

Keywords: green preferences; fossil fuel; green energy; green energy subsidy; cap-and-trade; overlapping regulation; competitive lobbying;

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