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Green transitions and the prevention of environmental disasters: market based vs command-and-control policies

Author

Listed:
  • Francesco Lamperti

    (UP1 - Université Paris 1 Panthéon-Sorbonne)

  • Mauro Napoletano

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po, SKEMA Business School, UniCA - Université Côte d'Azur, SSSUP - Scuola Universitaria Superiore Sant'Anna = Sant'Anna School of Advanced Studies [Pisa])

  • Andrea Roventini

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

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

  • Francesco Lamperti & Mauro Napoletano & Andrea Roventini, 2019. "Green transitions and the prevention of environmental disasters: market based vs command-and-control policies," SciencePo Working papers Main hal-03403611, HAL.
    • Handle: RePEc:hal:spmain:hal-03403611
    DOI: 10.1017/S1365100518001001
    Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03403611
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    3. 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).
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    5. 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.
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    7. 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.
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