Demand- versus supply-side climate policies with a carbon dioxide ceiling

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Eichner, Thomas, Kollenbach, Gilbert ORCID: https://orcid.org/0000-0002-1168-3316 and Schopf, Mark (2023) Demand- versus supply-side climate policies with a carbon dioxide ceiling. The Economic Journal, 133 (652). pp. 1371-1406. ISSN 0013-0133

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Abstract

In a Hotelling model with a climate coalition and a free-riding fringe, we compare demand-side and supply-side climate policies aimed at keeping CO2 concentration below a ceiling equivalent to global warming of 2 ◦C. With the demand-side policy, the coalition caps its fuel demand. The corresponding allocation is intra-temporally distorted. With the supply-side policy, the coalition purchases deposits. The corresponding allocation is inter-temporally distorted and the fuel extraction path can be discontinuous. In an empirically calibrated economy, a medium-sized (the grand) coalition is stable with the demand-side (supply-side) policy. If the coalition acts strategically, the stable grand coalition implements first best.

Item Type: Article
Additional Information: Funding Information: Financial support from the German Science foundation (DFG Grants No. EI 847/1-2 and No. 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: 07 Nov 2024 18:30
Last Modified: 10 Nov 2024 07:30
URI: https://ueaeprints.uea.ac.uk/id/eprint/97577
DOI: 10.1093/ej/uead002

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