Carbon Leakage, the Green Paradox, and Perfect Future Markets

39 Pages Posted: 30 Aug 2011

See all articles by Thomas Eichner

Thomas Eichner

University of Siegen - School of Economic Disciplines

Rüdiger Pethig

affiliation not provided to SSRN

Multiple version iconThere are 2 versions of this paper

Date Written: August 2011

Abstract

Policies of lowering carbon demand may aggravate instead of alleviate climate change (green paradox). In a two‐period, three‐country general equilibrium model with finite endowment of fossil fuel, one country enforces an emissions cap in the first or second periods. When that cap is tightened, the extent of carbon leakage depends on the interaction of various parameters and elasticities. Conditions for the green paradox are specified. All determinants of carbon leakage resulting from tightening the first‐period cap work in the opposite direction when the second‐period cap is tightened. Tightening the second‐period cap does not necessarily lead to the green paradox.

Suggested Citation

Eichner, Thomas and Pethig, Rüdiger, Carbon Leakage, the Green Paradox, and Perfect Future Markets (August 2011). International Economic Review, Vol. 52, Issue 3, pp. 767-805, 2011. Available at SSRN: https://ssrn.com/abstract=1919403 or http://dx.doi.org/10.1111/j.1468-2354.2011.00649.x

Thomas Eichner (Contact Author)

University of Siegen - School of Economic Disciplines ( email )

Hoelderlinstrasse 3
57068 Siegen
Germany

Rüdiger Pethig

affiliation not provided to SSRN

No Address Available

Register to save articles to
your library

Register

Paper statistics

Downloads
3
Abstract Views
437
PlumX Metrics