Journal of Political Economy Vol. 120 No. 1 2012
Buy Coal! A Case for Supply-Side Environmental Policy
Abstract
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.
- DOI
- 10.1086/665405
- Volume
- 120
- Issue
- 1
- Pages
- 77-115
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref