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A theory of optimal green defaults
[working paper]
Corporate Editor
Helmholtz-Zentrum für Umweltforschung - UFZ
Abstract This paper develops an analytical framework for studying the Baumol-Oates efficiency of traditional single instrument abatementpolicies vis-à-vis green defaults in the face of price inertia and deliberate defaultingby subpopulations. In this special case ofbehavioural heterogeneity, command and cont... view more
This paper develops an analytical framework for studying the Baumol-Oates efficiency of traditional single instrument abatementpolicies vis-à-vis green defaults in the face of price inertia and deliberate defaultingby subpopulations. In this special case ofbehavioural heterogeneity, command and control approaches can outperform price-based instruments while pure tax/subsidy schemes need tobe adjusted in order to achievepolitically desired levels of abatement. We also prove that choice-preserving nudges are superior to any single-instrument policy in this case. An average marginal abatement cost rule is developed to optimise the green defaults and traditional policies of standards and prices under different degrees of market rigidity.... view less
Keywords
subsidy; environment tax; environmental economy; distribution impact; environmental directive; regulation; environmental policy; environmental protection
Classification
Special areas of Departmental Policy
Ecology, Environment
Document language
English
Publication Year
2015
City
Leipzig
Page/Pages
16 p.
Series
UFZ Discussion Papers, 6/2015
ISSN
1436-140X
Status
Published Version; reviewed
Licence
Creative Commons - Attribution-NonCommercial-ShareAlike