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Green Transitions And The Prevention Of Environmental Disasters: Market-Based Vs. Command-And-Control Policies

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  • Lamperti, Francesco
  • Napoletano, Mauro
  • Roventini, Andrea

Abstract

The paper compares the effects of market-based (M-B) and command-and-control (C&C) climate policies on the direction of technical change and the prevention of environmental disasters. Drawing on a model of endogenous growth and directed technical change, we show that M-B policies (carbon taxes and subsidies toward clean sectors) suffer from path dependence and exhibit bounded window of opportunities: delays in their implementation make them ineffective both in redirecting technical change, (i.e. triggering a transition toward clean energy) and in avoiding environmental catastrophes. On the contrary, we find that C&C interventions are favored by path dependence and guarantee policy effectiveness irrespectively of the timing of their introduction. As the hypothesis of path dependence in technological change has received vast empirical support and it is a key feature of many models of growth, we argue that C&C policies should be seen as a valuable and non-equivalent alternative to M-B interventions.

Suggested Citation

  • Lamperti, Francesco & Napoletano, Mauro & Roventini, Andrea, 2020. "Green Transitions And The Prevention Of Environmental Disasters: Market-Based Vs. Command-And-Control Policies," Macroeconomic Dynamics, Cambridge University Press, vol. 24(7), pages 1861-1880, October.
    • Handle: RePEc:cup:macdyn:v:24:y:2020:i:7:p:1861-1880_10
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    Cited by:

    1. Francesco Lamperti & Mariana Mazzucato & Andrea Roventini & Gregor Semieniuk, 2019. "The Green Transition: Public Policy, Finance, and the Role of the State," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 88(2), pages 73-88.
    2. Ziyuan Sun & Xiao Sun & Wei Wang & Mengxin Sun & Wenjiao Wang, 2024. "Green merger and acquisition decision driven by environmental regulation and its impact on green innovation: evidence from Chinese heavily polluting listed enterprises," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(2), pages 4973-5001, February.
    3. Donnelly, David & Fricaudet, Marie & Ameli, Nadia, 2023. "“Accelerating institutional funding of low-carbon investment: The potential for an investment emissions intensity tax”," Ecological Economics, Elsevier, vol. 207(C).
    4. Fiorillo, Damiano & Sapio, Alessandro, 2019. "Energy saving in Italy in the late 1990s: Which role for non-monetary motivations?," Ecological Economics, Elsevier, vol. 165(C), pages 1-1.
    5. Hötte, Kerstin, 2020. "How to accelerate green technology diffusion? Directed technological change in the presence of coevolving absorptive capacity," Energy Economics, Elsevier, vol. 85(C).
    6. Giovanni Bernardo & Pasquale Commendatore & Giovanni Fosco, 2024. "Revealing the Link Between Air Pollution and Internal Migration: Evidence from Italy," Discussion Papers 2024/312, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    7. Felix Meurer & Marco Sebastian Breder & Michael Bucksteeg & Hannes Hobbie & Dominik Moest & Hendrik Scharf & Christoph Weber, 2024. "Can an Obligation Bridge Germany’s PV Capacity Gap? Insights from a Regional Case Study," EWL Working Papers 2408, University of Duisburg-Essen, Chair for Management Science and Energy Economics, revised Dec 2024.
    8. Francesco Lamperti & Andrea Roventini, 2022. "Beyond climate economics orthodoxy: impacts and policies in the agent-based integrated-assessment DSK model," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 19(3), pages 357-380, December.
    9. Lamperti, F. & Dosi, G. & Napoletano, M. & Roventini, A. & Sapio, A., 2020. "Climate change and green transitions in an agent-based integrated assessment model," Technological Forecasting and Social Change, Elsevier, vol. 153(C).
    10. Carè, R. & Fatima, R. & Boitan, I.A., 2024. "Central banks and climate risks: Where we are and where we are going?," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 1200-1229.
    11. Zhang, Dan & Zheng, Mingbo & Feng, Gen-Fu & Chang, Chun-Ping, 2022. "Does an environmental policy bring to green innovation in renewable energy?," Renewable Energy, Elsevier, vol. 195(C), pages 1113-1124.

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