The green paradox of the economics of exhaustible resources

Robert Cairns

Energy Policy, 2014, vol. 65, issue C, 78-85

Abstract: The green paradox states that an increasing tax on emissions of carbon dioxide, consonant with the expected increase in their marginal damages, may induce oil producers to shift their production toward the present and thereby to exacerbate the problem of climatic change. The model is based on Hotelling models of resource use that do not take the natural and technical features of oil production into account. Natural features include the decline of production through time according to a decline curve. Technical features include the requirement to sink investment in productive capacity. A model of a profit-maximizing firm indicates that, if these features are taken into account, the prediction of the green paradox is unlikely.

Keywords: Green paradox; Hotelling′s rule; Constrained output; Investment; Natural decline; Decline curve (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0301421513010707
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:65:y:2014:i:c:p:78-85

DOI: 10.1016/j.enpol.2013.10.047

Access Statistics for this article

Energy Policy is currently edited by N. France

More articles in Energy Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().