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Demand versus Supply Side Climate Policies with a Carbon Dioxide Ceiling

Author

Listed:
  • Thomas Eichner
  • Gilbert Kollenbach
  • Mark Schopf
Abstract
In a Hotelling model with a climate coalition and a free-riding fringe, we compare demand-side and supply-side climate policies aimed at keeping CO$_2$ concentration below a ceiling equivalent to global warming of $2^\circ{\rm C}$. With the demand-side policy, the coalition caps its fuel demand. The corresponding allocation is intra-temporally distorted. With the supply-side policy, the coalition purchases deposits. The corresponding allocation is inter-temporally distorted and the fuel extraction path can be discontinuous. In an empirically calibrated economy, a medium-sized (the grand) coalition is stable with the demand-side (supply-side) policy. If the coalition acts strategically, the stable grand coalition implements first best.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Thomas Eichner & Gilbert Kollenbach & Mark Schopf, 2018. "Demand versus Supply Side Climate Policies with a Carbon Dioxide Ceiling," Volkswirtschaftliche Diskussionsbeiträge 185-18, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht.
    • Handle: RePEc:sie:siegen:185-18
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    File URL: https://www.wiwi.uni-siegen.de/vwl/repec/sie/papers/185-18.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Demand Side Policy; Supply Side Policy; Climate Change; Deposit; Fossil Fuel;
    All these keywords.

    JEL classification:

    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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