Public Policies Against Global Warming

42 Pages Posted: 13 Sep 2007

See all articles by Hans-Werner Sinn

Hans-Werner Sinn

CESifo (Center for Economic Studies and Ifo Institute); National Bureau of Economic Research (NBER); Ludwig Maximilian University of Munich (LMU)

Multiple version iconThere are 2 versions of this paper

Date Written: August 2007

Abstract

Judged by the principle of intertemporal Pareto optimality, insecure property rights and the greenhouse effect both imply overly rapid extraction of fossil carbon resources. A gradual expansion of demand-reducing public policies - such as increasing ad-valorem taxes on carbon consumption or increasing subsidies for replacement technologies - may exacerbate the problem as it gives resource owners the incentive to avoid future price reductions by anticipating their sales. Useful policies instead involve sequestration, afforestation, stabilization of property rights and emissions trading. Among the public finance measures, constant unit carbon taxes and source taxes on capital income for resource owners stand out.

Keywords: global warming, carbon taxes, Pareto optimality

JEL Classification: O13, Q32, Q54, H23

Suggested Citation

Sinn, Hans-Werner, Public Policies Against Global Warming (August 2007). CESifo Working Paper Series No. 2087. Available at SSRN: https://ssrn.com/abstract=1014027

Hans-Werner Sinn (Contact Author)

CESifo (Center for Economic Studies and Ifo Institute) ( email )

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National Bureau of Economic Research (NBER)

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Ludwig Maximilian University of Munich (LMU)

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