Is there a Green Paradox?

Michael Hoel ()

No 3168, CESifo Working Paper Series from CESifo

Abstract: A sufficiently rapidly rising carbon tax may increase near-term emissions compared with the case of no carbon tax. Even so, such a carbon tax path may reduce total costs related to climate change, since the tax may reduce total carbon extraction. A government cannot commit to a specific carbon tax rate in the distant future. For reasonable assumptions about expectation formation, a higher present carbon tax will reduce near-term carbon emissions. Moreover, whatever the expectations about future tax rates are, near-term emissions will decline for a sufficiently high carbon tax. However, if the near-term tax rate for some reason is set below its optimal level, increased concern for the climate may change taxes in a manner that increases near-term emissions.

Keywords: climate change; exhaustible resources; green paradox; carbon tax (search for similar items in EconPapers)
JEL-codes: Q31 Q38 Q41 Q48 Q54 Q58 (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (47)

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Related works:
Working Paper: Is there a green paradox? (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_3168

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