If global warming is to stay below 2°C, there are four risks of assets stranding. First, substantial fossil fuel reserves will be stranded at the end of the fossil era. Second, this will be true for exploration capital too. Third, unanticipated changes in present or expected future climate...

This paper explains how, in the context of incomplete coordination among all countries, unilateral policies that might at first sight seem pro-green could actually turn out to harm the global environment. The free-riding motives and the difficulty of reaching an effective international...

Under which conditions unilateral tightening of climate policy causes a weak or strong green paradox or even decreases social welfare has recently been studied by Hoel (2011). Hoel assumes that the costs of extracting fossil fuel are linear in output. We extend his model by allowing for...

The green paradox conveys the idea that climate policies may have unintended side effects when taking into account the reaction of fossil fuel suppliers. In particular, carbon taxes that will be implemented in the future induce resource owners to extract more rapidly which increases present...

This paper shifts the perspective of the recent green paradox literature towards the demand side. Based on a simple model, I show that a subsidy on input factors in a Cobb-Douglas production function may contribute substantially to postponing resource extraction into the future and, thereby, to...

The green paradox conveys the idea that climate policies may have unintended side effects when taking into account the reaction of fossil fuel suppliers. In particular, carbon taxes that will be implemented in the future induce resource owners to extract more rapidly which increases present...