Publication Date:
2015-07-18
Description:
This article examines how, in a world with incomplete coordination among countries, well-intentioned unilateral environmental policies may actually harm the global environment. This outcome is known as the "Green Paradox." The incentives for free-riding and the challenge of achieving an effective international environmental agreement are reviewed. I examine the various channels that lead to carbon leakage in static models of open economies, and report some simulation results. This is complemented by a review of the potential for Green Paradox outcomes in dynamic open-economy models in which forward-looking firms exploit an exhaustible resource. I show that border tax adjustments can lead to Green Paradox outcomes. I also discuss priorities for future research on environmental policies in a trading world that lacks a central enforcement agency.
Keywords:
Q54 - Climate
;
Natural Disasters
;
Global Warming, Q42 - Alternative Energy Sources
Print ISSN:
1750-6816
Electronic ISSN:
1750-6824
Topics:
Energy, Environment Protection, Nuclear Power Engineering
,
Political Science
,
Economics
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