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Title:Is there a green paradox? PDF Logo
Authors:Hoel, Michael
Issue Date:2010
Series/Report no.:CESifo working paper: Energy and climate economics 3168
Abstract:A sufficiently rapidly rising carbon tax may increase near-term emissions compared with the case of no carbon tax. Even so, such a carbon tax path may reduce total costs related to climate change, since the tax may reduce total carbon extraction. A government cannot commit to a specific carbon tax rate in the distant future. For reasonable assumptions about expectation formation, a higher present carbon tax will reduce near-term carbon emissions. Moreover, whatever the expectations about future tax rates are, near-term emissions will decline for a sufficiently high carbon tax. However, if the near-term tax rate for some reason is set below its optimal level, increased concern for the climate may change taxes in a manner that increases near-term emissions.
Subjects:climate change
exhaustible resources
green paradox
carbon tax
JEL:Q31
Q38
Q41
Q48
Q54
Q58
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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