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Triggering the Green Transition; Policies for Transitional Dynamics

Author

Listed:
  • Rick van der Ploeg
  • Anthony J. Venables

Abstract

Using a dynamic model in which heterogenous consumers make forward-looking choices between brown and green durable goods, we establish conditions under which peer effects lead to multiple steady states. There is a critical threshold that policy needs to exceed to create a feasible transition path between states. We analyse the feasibility, speed, and cost of transition. Pigouvian policies internalising the externalities with climate damage and peer effects may be insufficient to lead to a green transition; even if they are, they may not yield net benefits.

Suggested Citation

  • Rick van der Ploeg & Anthony J. Venables, 2026. "Triggering the Green Transition; Policies for Transitional Dynamics," CESifo Working Paper Series 12647, CESifo.
    • Handle: RePEc:ces:ceswps:_12647
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    File URL: https://www.ifo.de/DocDL/cesifo1_wp12647.pdf
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    Keywords

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    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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