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Unilateral Supply Side Policies and the Green Paradox

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  • Mark Schopf

    (University of Paderborn)

Abstract

This paper deals with possible foreign reactions to unilateral carbon supply reducing policies. It differentiates between demand and supply side reactions as well as between intra- and intertemporal shifts of greenhouse gas emissions. Ritter & Schopf (2014) integrate stock-dependent marginal physical extraction costs into Eichner & Pethig’s (2011) general equilibrium carbon leakage model. Using this model, we change the policy instrument from an emissions trading scheme to a deposit preserving system. The results are as follows: Under similar conditions than those derived by Ritter & Schopf (2014), the weak green paradox and the strong green paradox arise. In case of acting today, these conditions are tightened due to the energy market channel of carbon leakage. In case of acting tomorrow, the change in the physical user cost of extraction additionally influences the effectiveness of the carbon supply reducing policies. In both cases, it can be more effective to preserve the deposits with the lowest marginal physical extraction costs first.

Suggested Citation

  • Mark Schopf, 2016. "Unilateral Supply Side Policies and the Green Paradox," Working Papers Dissertations 28, Paderborn University, Faculty of Business Administration and Economics.
    • Handle: RePEc:pdn:dispap:28
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    File URL: http://groups.uni-paderborn.de/wp-wiwi/RePEc/pdf/dispap/DP28.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Carbon Leakage; Green Paradox; General Equilibrium Model;
    All these keywords.

    JEL classification:

    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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