Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/144844
Authors: 
Eichner, Thomas
Pethig, Rüdiger
Year of Publication: 
2015
Series/Report no.: 
Volkswirtschaftliche Diskussionsbeiträge, Universität Siegen, Fachbereich Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht 178-15
Abstract: 
In Harstad´s (2012) model, climate damage only hits one group of countries, called the coalition, and the coalition´s climate policy consists of capping own fuel demand and supply combined with the purchase of fossil fuel deposits for preservation. Harstad´s Theorem 1 states that if the deposit market clears the coalition´s strategic fuel-cap policy implements the first-best. The present paper reconstructs that efficiency result and argues that the deposit market equilibrium as defined in Harstad (2012) fails to be attained, unless the non-coalition countries act cooperatively on the deposit market. Without such cooperation, the coalition´s strategic action on the fuel market distorts the allocation to its own favor.
Subjects: 
climate coalition
fossil fuel
deposits
extraction
fuel caps
JEL: 
Q31
Q38
Q55
Document Type: 
Working Paper

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