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The Political Economics of Green Transitions

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  • Timothy Besley
  • Torsten Persson

Abstract

Reducing the emissions of greenhouse gases may be almost impossible without a green transition—a substantial transformation of consumption and production patterns. To study such transitions, we propose a dynamic model, which differs from the common approach in economics in two ways. First, consumption patterns reflect not just changing prices and taxes, but changing values. Transitions of values and technologies create a dynamic complementarity that can help or hinder a green transition. Second, and unlike fictitious social planners, policy makers in democratic societies cannot commit to future policy paths, as they are subject to regular elections. We show that market failures and government failures can interact to prevent a welfare-increasing green transition from materializing or make an ongoing green transition too slow.

Suggested Citation

  • Timothy Besley & Torsten Persson, 2023. "The Political Economics of Green Transitions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 138(3), pages 1863-1906.
    • Handle: RePEc:oup:qjecon:v:138:y:2023:i:3:p:1863-1906.
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    File URL: http://hdl.handle.net/10.1093/qje/qjad006
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    References listed on IDEAS

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    1. Putnam, Robert D., 1988. "Diplomacy and domestic politics: the logic of two-level games," International Organization, Cambridge University Press, vol. 42(3), pages 427-460, July.
    2. David Popp, 2002. "Induced Innovation and Energy Prices," American Economic Review, American Economic Association, vol. 92(1), pages 160-180, March.
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    Cited by:

    1. Donatella Gatti & Julien Vauday, 2023. "Environmental transition through social change and lobbying by citizens," Working Papers hal-04158754, HAL.
    2. Yasmine van der Straten & Enrico Perotti & Frederick van der Ploeg & Rick van der Ploeg, 2024. "Political Economy of Climate Change Adaptation," CESifo Working Paper Series 10961, CESifo.
    3. Robert Huang & Matthew E. Kahn, 2024. "Household carbon dioxide emissions Engel Curve dynamics," Contemporary Economic Policy, Western Economic Association International, vol. 42(3), pages 396-415, July.
    4. Hua Feng & Zhihong Zhang & Qinglu Wang & Lingyun Yang, 2024. "Does a Company’s Position within the Interlocking Director Network Influence Its ESG Performance?—Empirical Evidence from Chinese Listed Companies," Sustainability, MDPI, vol. 16(10), pages 1-29, May.
    5. Lorenz Dögnitz & Théo Konc & Linus Mattauch, 2024. "The Political Economics of Green Transitions: Optimal Intertemporal Policy Response," Berlin School of Economics Discussion Papers 0047, Berlin School of Economics.
    6. Fangzhi Wang & Hua Liao & Richard S.J. Tol & Changjing, "undated". "Endogenous preference for non-market goods in carbon abatement decision," Working Paper Series 0224, Department of Economics, University of Sussex Business School.
    7. Donatella Gatti & Julien Vauday, 2023. "Green cultural transition, environmental taxes, and collective lobbying by social groups of citizens," Post-Print hal-04189019, HAL.
    8. Ye, Xiang & Yue, Pengpeng, 2024. "What matters to reshaping consumption patterns in China? Digital inclusion and supply chain," Finance Research Letters, Elsevier, vol. 59(C).
    9. Xu, Dandan & Guo, Dongli & Yue, Pengpeng & Li, Mengshi, 2024. "Household green consumption: Does digital inclusion matter?," International Review of Financial Analysis, Elsevier, vol. 91(C).
    10. Cha, Min-kyeong & Struthers, Cory L. & Brown, Marilyn A. & Kale, Snehal & Chapman, Oliver, 2024. "Toward residential decarbonization: Analyzing social-psychological drivers of household co-adoption of rooftop solar, electric vehicles, and efficient HVAC systems in Georgia, U.S," Renewable Energy, Elsevier, vol. 226(C).
    11. Josse Delfgaauw & Otto Swank, 2023. "The Gasoline Climate Trap," Tinbergen Institute Discussion Papers 23-025/VII, Tinbergen Institute.

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    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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