Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/145658
Authors: 
Pethig, Rüdiger
Eichner, Thomas
Year of Publication: 
2016
Series/Report no.: 
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2016: Demographischer Wandel - Session: Environmental Economics: Policy B15-V1
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 de- mand and supply combined with the purchase of fossil fuel deposits for preserva- tion. 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 cooper- atively on the deposit market. Without such cooperation, the coalition’s strategic action on the fuel market distorts the allocation to its own favor.
JEL: 
Q31
Q38
Q54
Document Type: 
Conference Paper

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