Announcing climate policy: Can a green paradox arise without scarcity?
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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- Rick van der Ploeg & Cees Withagen, 2010.
"Is There Really a Green Paradox?,"
OxCarre Working Papers
035, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
- Frederick Van der Ploeg & Cees A. Withagen, 2010. "Is There Really a Green Paradox?," CESifo Working Paper Series 2963, CESifo Group Munich.
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- Corrado Maria & Edwin Werf, 2008.
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Environmental & Resource Economics,
European Association of Environmental and Resource Economists, vol. 39(2), pages 55-74, February.
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- Corrado Di Maria & Sjak Smulders & Edwin van der Werf, 2008. "Absolute Abundance and Relative Scarcity: Announced Policy, Resource Extraction, and Carbon Emissions," Working Papers 2008.92, Fondazione Eni Enrico Mattei.
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