 The Green Paradox in Open Economies: Lessons from Static and Dynamic ModelsReview of Environmental Economics and Policy, 2015, vol. 9, issue 2, 266-284 Abstract: This article examines how, in a world with incomplete coordination among countries, well-intentioned unilateral environmental policies may actually harm the global environment. This outcome is known as the "Green Paradox." The incentives for free-riding and the challenge of achieving an effective international environmental agreement are reviewed. I examine the various channels that lead to carbon leakage in static models of open economies, and report some simulation results. This is complemented by a review of the potential for Green Paradox outcomes in dynamic open-economy models in which forward-looking firms exploit an exhaustible resource. I show that border tax adjustments can lead to Green Paradox outcomes. I also discuss priorities for future research on environmental policies in a trading world that lacks a central enforcement agency. Date: 2015 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:oup:renvpo:v:9:y:2015:i:2:p:266-284. Ordering information: This journal article can be ordered from Access Statistics for this article Review of Environmental Economics and Policy is currently edited by Robert Stavins More articles in Review of Environmental Economics and Policy from Association of Environmental and Resource Economists Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK. Contact information at EDIRC. |
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