The value of commitment and delegation for the control of greenhouse gas emissions
Paul Pichler and
Gerhard Sorger ()
Vienna Economics Papers from University of Vienna, Department of Economics
We analyze a stylized model of a world consisting of a large number of countries, which derive utility from energy consumption but suffer both from the emission of greenhouse gases (smog, black carbon, etc.) as well as from the external effects caused by climate change. The countries decide individually on investments in clean (i.e., emission free) technologies for energy production, whereas a supranational environmental authority decides for each country on the maximally permitted amount of emissions of greenhouse gases. We demonstrate that the authority faces a dynamic inconsistency problem that leads to welfare losses. Yet these welfare losses can be kept small if the mandate for the authority penalizes the local cost of emissions very heavily but puts little or no weight at all on the cost of climate change.
JEL-codes: F53 H87 O33 O44 Q43 Q54 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr, nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:vie:viennp:1604
Access Statistics for this paper
More papers in Vienna Economics Papers from University of Vienna, Department of Economics
Bibliographic data for series maintained by Paper Administrator ().