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Please use this identifier to cite or link to this item:
http://hdl.handle.net/10419/32809
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| Title: | | Climate policy as expectation management?  |
| Authors: | | Narita, Daiju |
| Issue Date: | | 2010 |
| Series/Report no.: | | Kiel working paper 1624 |
| Abstract: | | It is believed that the primary economic solution to climate change is an introduction of a carbon pricing system anchored to the social cost of carbon, either as a form of tax or tradable permits. Potentially significant externalities accompanying the introduction of emission-reducing technologies, however, imply that the standard argument does not capture some important aspects for the designing of climate policy such as expectation-driven technology adoption. By using a simple model, we show some possible cases where carbon emission reduction progresses in a self-fulfilling prophecy by firms expecting others' future actions. In such circumstances, the carbon pricing system does not have much influence on determining the final outcome of economy-wide emission reduction. This highlights the danger of overemphasis on finding the 'right' carbon price in policy making and the role of climate policy as expectation management. |
| Subjects: | | Climate policy technology choice expectations multiple equilibria |
| JEL: | | Q54 O33 |
| Appears in Collections: | | Publikationen von Forscherinnen und Forschern des IfW Kieler Arbeitspapiere, IfW
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