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Dynamic Climate Policy with Both Strategic and Non-Strategic Agents : Taxes versus Quantities / Karp, Larry
World Bank Open Knowledge Repository (formerly "World Bank E-Library Publications") Available online
View online- Format:
- Book
- Government document
- Author/Creator:
- Karp, Larry
- Series:
- Policy research working papers.
- World Bank e-Library.
- Language:
- English
- Subjects (All):
- Climate Change Economics.
- Climate Policy.
- Cumulated Emissions.
- Debt Markets.
- Economic Theory & Research.
- Emerging Markets.
- Energy.
- Environment.
- Fossil Fuel Consumption.
- Fossil Fuel Markets.
- Markets and Market Access.
- Strategic Importers.
- Local Subjects:
- Climate Change Economics.
- Climate Policy.
- Cumulated Emissions.
- Debt Markets.
- Economic Theory & Research.
- Emerging Markets.
- Energy.
- Environment.
- Fossil Fuel Consumption.
- Fossil Fuel Markets.
- Markets and Market Access.
- Strategic Importers.
- Physical Description:
- 1 online resource (34 pages)
- Other Title:
- Dynamic Climate Policy with Both Strategic and Non-Strategic Agents
- Place of Publication:
- Washington, D.C., The World Bank, 2013
- System Details:
- data file
- Summary:
- This paper studies a dynamic game where each of two large blocs, of fossil fuel importers and exporters respectively, sets either taxes or quotas to exercise power in fossil-fuel markets. The main novel feature is the inclusion of a "fringe" of non- strategic (emerging and developing) countries which both consume and produce fossil fuels. Cumulated emissions over time from global fossil fuel consumption create climate damages which are considered by both the strategic importer and the non-strategic countries. Markov perfect equilibria are examined under the four combinations of trade policies and compared with the corresponding static games where climate damages are given (not stock-related). The main results are that taxes always dominate quota policies for both the strategic importer and exporter and that "fringe" countries benefitted from a tax policy as compared with a quota policy for the strategic importer, as the import fuel price then is lower, and the strategic importer's fuel consumption is also lower, thus causing fewer climate damages.
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