Reducing residential emissions: carbon pricing vs. subsidizing retrofits

Alkis Blanz and Beatriz Gaitan

Abstract: In this paper, we compare different mitigation policies when housing investments are irreversible. We use a general equilibrium model with non-homothetic preferences and an elaborate setup of the residential housing and energy production sector. In the first-best transition, the energy demand plays only a secondary role. However, this changes when optimal carbon taxes are not available. While providing subsidies for retrofits results in the lowest direct costs for households, it ultimately leads to the highest aggregate costs and proves to be an ineffective way to decarbonize the economy. In the second-best context, a phased-in carbon price outperforms the subsidy-based transition.

Date: 2023-10
New Economics Papers: this item is included in nep-dge, nep-ene and nep-env
References: Add references at CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2310.15687 Latest version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2310.15687

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().