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Climate Policy and Nonrenewable ResourcesThe Green Paradox and Beyond$
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Karen Pittel, Frederick van der Ploeg, and Cees Withagen

Print publication date: 2014

Print ISBN-13: 9780262027885

Published to MIT Press Scholarship Online: January 2015

DOI: 10.7551/mitpress/9780262027885.001.0001

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PRINTED FROM MIT PRESS SCHOLARSHIP ONLINE (www.mitpress.universitypressscholarship.com). (c) Copyright The MIT Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in MITSO for personal use.date: 23 July 2021

The Impacts of Announcing and Delaying Green Policies

The Impacts of Announcing and Delaying Green Policies

Chapter:
(p.211) 9 The Impacts of Announcing and Delaying Green Policies
Source:
Climate Policy and Nonrenewable Resources
Author(s):

Darko Jus

Volker Meier

Publisher:
The MIT Press
DOI:10.7551/mitpress/9780262027885.003.0009

Employing a Stackelberg differential game approach, the chapter derives the carbon tax chosen by a climate coalition of resource consuming countries which purchase the fossil resource from a representative competitive resource supplier. The global climate coalition reduces the speed at which the global fossil resource stock is depleted over time to the socially efficient level by levying the Pigou tax on resource consumption. If the climate coalition is incomplete, the chosen unilateral carbon tax falls short of the Pigou tax. Furthermore, international carbon leakage undermines the effectiveness of the unilateral carbon tax in slowing down the speed of global resource extraction. Nevertheless, under the assumptions made, also the incomplete climate coalition is able to slow down the speed of global extraction to some extent because the chosen carbon tax is time-consistent, irrespective of whether the coalition is global or incomplete.

Keywords:   Global warming externality, Stackelberg differential game, carbon tax, carbon leakage, time-consistency

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