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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/38935
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| Title: | | Buy coal!: Deposit markets prevent carbon leakage  |
| Authors: | | Harstad, Bård |
| Issue Date: | | 2010 |
| Series/Report no.: | | CESifo working paper Energy and Climate Economics 2992 |
| Abstract: | | If a coalition of countries implements climate policies, nonparticipants tend to consume more, pollute more, and invest too little in renewable energy sources. In response, the coalition's equilibrium policy distorts trade and it is not time consistent. By adding a market for the right to exploit fossil fuel deposits, I show that these problems vanish and the first best is implemented. When the market for deposits clears, the coalition relies entirely on supply-side policies, which is simple to implement in practice. The result illustrates that efficiency can be obtained without Coasian negotiations ex post, if key inputs are tradable ex ante. |
| Subjects: | | Coase climate change carbon leakage supply v demand side policies trade policies the green paradox and environmental agreements |
| JEL: | | Q54 Q58 H23 F55 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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