Buy Coal! A Case for Supply-Side Environmental Policy
Free-riding is at the core of environmental problems. If a climate coalition reduces its emissions, world prices change and nonparticipants typically emit more; they may also extract the dirtiest type of fossil fuel and invest too little in green technology. The coalition’s second-best policy distorts trade and is not time consistent. However, suppose that the countries can trade the rights to exploit fossil-fuel deposits: As soon as the market clears, the above-mentioned problems vanish and the first-best is implemented. In short, the coalition’s best policy is to simply buy foreign deposits and conserve them.
Year of publication: |
2012
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Authors: | Harstad, Bård |
Published in: |
Journal of Political Economy. - University of Chicago Press. - Vol. 120.2012, 1, p. 77-77
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Publisher: |
University of Chicago Press |
Saved in:
Online Resource
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