Cover

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Title Page, Copyright Page

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Contents

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pp. v-vi

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Series Foreword

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pp. vi-viii

This book is part of the CESifo Seminar Series. The series aims to cover topical policy issues in economics from a largely European perspective. The books in this series are the products of the papers and intensive debates that took place during the seminars hosted by CESifo...

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1. The Green Paradox: A Mirage?

Karen Pittel, Rick van der Ploeg, and Cees Withagen

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pp. 1-18

The interrelation between economics and the environment has posed a number of difficult challenges in the course of history of which climate change is universally considered to be the probably biggest faced so far. The global scale and long-run nature of climate change...

I. Extraction Costs

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2. Supply-Side Climate Policy and the Green Paradox

Michael Hoel

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pp. 21-42

Unless all countries cooperate on demand-side climate policies such as a carbon tax, it is well-known that the attempts of some countries to reduce carbon emissions through demand-side climate policies, such as a carbon tax or emission quotas, may be undermined by increased...

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3. The Green Paradox as a Supply Phenomenon

Julien Daubanes and Pierre Lasserre

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pp. 43-56

The so-called green paradox refers to the fact that future, anticipated policies aiming at reducing the demand for an extracted exhaustible resource increase the present or near future equilibrium rate of extraction of that resource. Hans-Werner Sinn (2008) coined the expression...

II. Technology, Innovation, and Substitutability

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4. The Green Paradox under Imperfect Substitutability between Clean and Dirty Fuels

Ngo Van Long

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pp. 59-86

The burning of fossil fuels generates emissions that harm the environment not only in the present but also in the future, since emissions add to a pollution stock that decays only very slowly. As has been pointed out by many authors, the first best policy measure is to impose at each...

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5. Fossil Fuels, Backstop Technologies, and Imperfect Substitution

Gerard van der Meijden

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pp. 87-120

Technical progress and backstop technologies are now generally considered to be the solution to the sustainability problem raised by the Club of Rome in their alarming report about the limits to growth on our finite planet (Meadows et al. 1972): the economic consequences of..

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6. Innovation and the Green Paradox

Ralph A. Winter

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pp. 121-150

A recent economics literature has joined the theory of exhaustible resources with the dynamics of global warming.1 This theoretical literature shows that government policies directed at climate change can have perverse consequences. The anticipation of a future policy promoting...

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7. Resource Extraction and Backstop Technologies in General Equilibrium

Ngo Van Long and Frank Stähler

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pp. 151-170

In this chapter we study the impact of technological progress of a backstop technology in a general equilibrium model where owners of finite resource stocks adjust their extraction paths to maximize their wealth, and where the rate of interest is endogenously determined...

III. Timing, Announcement Effects, and Time Consistency

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8. Does a Future Rise in Carbon Taxes Harm the Climate?

Florian Habermacher and Gebhard Kirchgässner

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pp. 173-210

In his seminal contribution Pearce (1991) discussed the advantages of a carbon tax as an efficient policy instrument to reduce carbon dioxide emissions. He considered only the demand side, implicitly assuming a fixed, exogenous energy supply.
Today a large fraction of climate economics research still exhibits the...

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9. The Impacts of Announcing and Delaying Green Policies

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pp. 211-224

The green paradox can be interpreted as a story about the announcement effects of “green” policies, and in particular, taxes on the extraction or the use of fossil resources. In a static setting, introducing a specific consumption tax or employing some similar measure always...

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10. Going Full Circle: Demand-Side Constraints to the Green Paradox

Corrado Di Maria, Ian Lange, and Edwin van der Werf

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pp. 225-252

Hans-Werner Sinn coined the term “green paradox” to indicate the possibility that climate policies, such as carbon taxation and subsidies to renewable sources of energy, might induce resource owners to increase fossil fuel supplies in the short run, and hence increase current...

IV. Empirics and Quantification

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11. Quantifying Intertemporal Emissions Leakage

Carolyn Fischer and Stephen Salant

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pp. 255-286

Reducing emissions of the greenhouse gases (GHGs) that contribute to global climate change is the greatest collective action problem of our time. According to the Intergovernmental Panel on Climate Change (IPCC), avoiding the largest risks of climate change will require that...

Contributors

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pp. 287-288

Index

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pp. 289-296