Buying versus leasing fuel deposits for preservation

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Eichner, Thomas, Kollenbach, Gilbert ORCID: https://orcid.org/0000-0002-1168-3316 and Schopf, Mark (2021) Buying versus leasing fuel deposits for preservation. The Scandinavian Journal of Economics, 123 (1). pp. 110-143. ISSN 0347-0520

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Abstract

In a two-period model with two groups of countries that extract, trade, and consume fossil fuels, a climate coalition fights against climate change by purchasing or leasing deposits to prevent their extraction and seeks to manipulate fuel prices in its favor. The policy of purchasing deposits is inefficient because it leaves the first-period climate externality non-internalized. By contrast, the deposit-lease policy turns out to be efficient if it eliminates strategic action in the fuel markets. In an empirically calibrated economy, the coalition's welfare and total welfare are greater with the deposit-lease policy than with the deposit-purchase policy if the discount rate is smaller than 2.7 percent per annum.

Item Type: Article
Additional Information: Funding Information: Financial support from the German Science foundation (DFG grant numbers EI 847/1‐2 and PE 212/9‐2) is gratefully acknowledged.
Uncontrolled Keywords: sdg 13 - climate action ,/dk/atira/pure/sustainabledevelopmentgoals/climate_action
Faculty \ School: Faculty of Social Sciences > School of Economics
UEA Research Groups: Faculty of Social Sciences > Research Groups > Environment, Resources and Conflict
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Depositing User: LivePure Connector
Date Deposited: 22 Oct 2024 09:30
Last Modified: 31 Oct 2024 10:30
URI: https://ueaeprints.uea.ac.uk/id/eprint/97087
DOI: 10.1111/sjoe.12394

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