Mash, Richard, Helm, Dieter and Hepburn, Cameron (2003) Time inconsistent environmental policy and optimal delegation. Department of Economics discussion paper series (175). Department of Economics, Oxford University, Oxford, UK.
Full text not available from this repository.Abstract
Time consistency problems can arise when environmental taxes are employed to encourage firms to take irreversible abatement decisions. Setting a high carbon tax, for instance, would induce firms to invest in low-carbon technology, yet once investment has occurred the government can then reduce the carbon tax to better achieve other objectives; lower energy prices, redistribution, and electoral success. The resulting time inconsistency discourages firms from investing in the first place. We propose an institutional solution to this problem, adapted from the monetary policy literature; the commitment outcome can be achieved through delegation to an `environmental policymaker`, akin to a conservative central banker.
| Item Type: | Monograph (Discussion Paper) |
|---|---|
| Official URL: | http://www.economics.ox.ac.uk/index.php/papers/det... |
| Additional Information: | © 2003 The Authors |
| Divisions: | Grantham Research Institute |
| Subjects: | G Geography. Anthropology. Recreation > GE Environmental Sciences H Social Sciences > HB Economic Theory |
| Date Deposited: | 02 Mar 2011 14:18 |
| Last Modified: | 11 Dec 2024 18:35 |
| URI: | http://eprints.lse.ac.uk/id/eprint/33016 |
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