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Title:Carbon leakage, the green paradox and perfect future markets PDF Logo
Authors:Eichner, Thomas
Pethig, Rüdiger
Issue Date:2009
Series/Report no.:CESifo working paper 2542
Abstract:Policies of lowering carbon demand may aggravate rather than alleviate climate change (green paradox). In a two-period three-country general equilibrium model with finite endowment of fossil fuel one country enforces an emissions cap in the first or second period. When that cap is tightened the extent of carbon leakage depends on the interaction of various parameters and elasticities. Conditions for the green paradox are specified. All determinants of carbon leakage resulting from tightening the first-period cap work in opposite direction when the second-period cap is tightened. Tightening the second-period cap does not necessarily lead to the green paradox.
Subjects:Carbon leakage
green paradox
emissions cap
JEL:H22
Q32
Q54
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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