The Time-Inconsistency of Alternative Energy Policy

Agnes d'Artigues, Jacques Percebois and Thierry Vignolo ()

No ECO2007/32, Economics Working Papers from European University Institute

Abstract: Time-inconsistency can arise when a government attempts to convince private sector to use a particular alternative energy (gas, green electricity...) rather than petroleum products. By introducing taxes and feed-in prices, a government would encourage firms and households to switch to an alternative energy rather than use petroleum products. However, even if a government is in favor of increasing alternative energy consumption, it can benefit from considerable financial resources resulting from petroleum product consumption. As a result of these conflicting issues, the private sector may not find the alternative energy policy credible, which prevents the government to implement a socially efficient policy.

Keywords: energy policy; time inconsistency; alternative energy (search for similar items in EconPapers)
JEL-codes: E62 Q42 Q48 (search for similar items in EconPapers)
Date: 2007
New Economics Papers: this item is included in nep-ene, nep-env and nep-mac
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Citations: View citations in EconPapers (1)

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