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A theory of optimal green defaults

Georg Meran and Reimund Schwarze

No 6/2015, UFZ Discussion Papers from Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS)

Abstract: This paper develops an analytical framework for studying the Baumol-Oates efficiency of traditional single instrument abatementpolicies vis-à-vis green defaults in the face of price inertia and deliberate defaultingby subpopulations. In this special case ofbehavioural heterogeneity, command and control approaches can outperform price-based instruments while pure tax/subsidy schemes need tobe adjusted in order to achievepolitically desired levels of abatement. We also prove that choice-preserving nudges are superior to any single-instrument policy in this case. An average marginal abatement cost rule is developed to optimise the green defaults and traditional policies of standards and prices under different degrees of market rigidity.

JEL-codes: H21 H23 L51 Q52 Q58 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-env and nep-reg
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https://www.econstor.eu/bitstream/10419/109648/1/822940671.pdf (application/pdf)

Related works:
Journal Article: A Theory of Optimal Green Defaults (2018) Downloads
Working Paper: A Theory of Optimal Green Defaults (2015) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ufzdps:62015

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