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Private provision of public goods in a second-best workd: Cap-and-trade schemes limit green consumerism

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  • Grischa Perino

    (University of East Anglia)

Abstract

Private provision of public goods can only supplement government provision if individual actions affect the level of the public good. Cap-and-trade schemes reduce the overuse of common resources such as a stable climate or fish stocks by imposing a binding cap on total use by regulated agents. Any private contributions provided by means of e.g. green consumerism or life-style choices within such a scheme only impacts on who uses the resource but leaves total use unaffected. Perfect offsetting of marginal contributions is a key design element of cap-and-trade schemes. As real world cap-and-trade policies like the EU Emission Trading System have incomplete coverage, understanding what they cover is crucial for individuals aiming to contribute. Otherwise contribution efforts backfire.

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Bibliographic Info

Paper provided by School of Economics, University of East Anglia, Norwich, UK. in its series Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) with number 13-01.

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Date of creation: 24 Jan 2013
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Handle: RePEc:uea:wcbess:13-01

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Related research

Keywords: cap-and-trade; green consumerism; emissions tax; crowding-out of private contributions; carbon labelling;

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