Endogenous preferences and environmental policy

Halvor Briseid Storrøsten ()
Additional contact information
Halvor Briseid Storrøsten: Statistics Norway, https://www.ssb.no/en/forskning/ansatte

Discussion Papers from Statistics Norway, Research Department

Abstract: This paper investigates environmental policy in the presence of endogenous preferences. The optimal time trajectory is achieved if and only if the consumer is perfectly time-consistent. The suboptimal trajectories do not only differ from the optimal path during the transition between two equilibria, but also the new stationary states differ. A key difference is more pollution in the suboptimal equilibrium. If the consumer is less than perfectly time-consistent, the standard Pigou tax can be complimented with taxes and subsidies to implement the optimal time trajectory. If this option is unavailable to the regulator, a second-best option is a single tax that is above the Pigouvian level. The results in this paper indicate that the integrated assessment models used by the Intergovernmental Panel on Climate Change (IPCC) to derive optimal emission paths may recommend too high carbon emissions.

Keywords: Regulation; Endogenous preferences; habits (search for similar items in EconPapers)
JEL-codes: D15 H23 H31 Q54 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2021-10
New Economics Papers: this item is included in nep-ene, nep-env, nep-ore and nep-res
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.ssb.no/en/natur-og-miljo/forurensning- ... 060d5a/DP964_web.pdf (application/pdf)

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:ssb:dispap:964

Ordering information: This working paper can be ordered from
https://www.ssb.no/e ... environmental-policy

Access Statistics for this paper

More papers in Discussion Papers from Statistics Norway, Research Department P.O.Box 8131 Dep, N-0033 Oslo, Norway. Contact information at EDIRC.
Bibliographic data for series maintained by L Maasø ().