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The Green Paradox in Open Economies

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  • Ngo Van Long

Abstract

This paper explains how, in the context of incomplete coordination among all countries, unilateral policies that might at first sight seem pro-green could actually turn out to harm the global environment. The free-riding motives and the difficulty of reaching an effective international environmental agreement are reviewed. As a first step, the various channels that lead to carbon leakage in static models of open economies are identified, and some simulation results are reported. This is complemented by a review of the possibility of green paradox outcomes in dynamic open-economy models with an exhaustible resource exploited by far-sighted firms. It is shown that border tax adjustments can lead to a green paradox outcome. Directions for future research are suggested.

Suggested Citation

  • Ngo Van Long, 2014. "The Green Paradox in Open Economies," CESifo Working Paper Series 4639, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_4639
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    File URL: http://www.cesifo-group.de/DocDL/cesifo1_wp4639.pdf
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    Cited by:

    1. Açıkgöz, Ömer T. & Benchekroun, Hassan, 2017. "Anticipated international environmental agreements," European Economic Review, Elsevier, vol. 92(C), pages 306-336.
    2. repec:bla:pacecr:v:22:y:2017:i:3:p:435-479 is not listed on IDEAS

    More about this item

    Keywords

    green paradox; climate change; carbon leakage;

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General

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