Delegating climate policy to a supranational authority: a theoretical assessment
Paul Pichler and
Gerhard Sorger ()
Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking from Verein für Socialpolitik / German Economic Association
We study the delegation of climate policy to a supranational environmental authority. We demonstrate that the authority faces a dynamic inconsistency problem that leads to welfare losses. The losses can be kept small if the mandate of the authority penalizes the local cost of emissions heavily, but puts little or no weight on the cost of climate change. The design of the authority's mandate creates another dynamic inconsistency because the countries face a recurrent incentive to modify it.
JEL-codes: F53 H87 O33 Q43 Q54 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr, nep-ene, nep-env and nep-reg
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Journal Article: Delegating climate policy to a supranational authority: a theoretical assessment (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc17:168058
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