Oil Shortages, Climate Change and Collective Action

David M Newbery

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: Concerns over future oil scarcity might not be so worrying but for the high carbon content of substitutes, and the limited capacity of the atmosphere to absorb additional CO2 from burning fuel. The paper argues that the tools of economics are helpful in understanding some of the key issues in pricing fossil fuels, the extent to which pricing can be left to markets, the need for, and design of, international agreements on corrective carbon pricing, and the potential prisoners’ dilemma in reaching such agreements, partly mitigated in the case of oil by current taxes and the likely incidence of carbon taxes on the oil price. The ‘Green Paradox’ in which carbon pricing exacerbates climate change is theoretically possible, but empirically unlikely.

Keywords: exhaustible resources; climate change; carbon prices; prisoners’ dilemma; international agreement; Green Paradox (search for similar items in EconPapers)
JEL-codes: H23 L71 Q32 Q54 (search for similar items in EconPapers)
Date: 2010-09-22
New Economics Papers: this item is included in nep-cwa, nep-ene, nep-env and nep-reg
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https://www.econ.cam.ac.uk/sites/default/files/pub ... pe-pdfs/cwpe1045.pdf

Related works:
Working Paper: Oil Shortages, Climate Change and Collective Action (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:1045

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