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The Political Economics of Green Transitions: Optimal Intertemporal Policy Response

Author

Listed:
  • Lorenz Dögnitz
  • Théo Konc
  • Linus Mattauch
Abstract
Besley and Persson (2023) pioneer a political economy model of a green transition with changing preferences. Here we solve for the optimal policy intervention and find that the optimal tax on the polluting good starts high and is subsequently declining, to support the transition in preferences. We quantify the welfare loss of ignoring preference changes.

Suggested Citation

  • Lorenz Dögnitz & Théo Konc & Linus Mattauch, 2024. "The Political Economics of Green Transitions: Optimal Intertemporal Policy Response," Berlin School of Economics Discussion Papers 0047, Berlin School of Economics.
    • Handle: RePEc:bdp:dpaper:0047
    DOI: 10.48462/opus4-5596
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    References listed on IDEAS

    as
    1. Daron Acemoglu & Philippe Aghion & Leonardo Bursztyn & David Hemous, 2012. "The Environment and Directed Technical Change," American Economic Review, American Economic Association, vol. 102(1), pages 131-166, February.
    2. Christopher Severen & Arthur A. van Benthem, 2022. "Formative Experiences and the Price of Gasoline," American Economic Journal: Applied Economics, American Economic Association, vol. 14(2), pages 256-284, April.
    3. Inge van den Bijgaart, 2018. "Too Slow a Change? Deep Habits, Consumption Shifts and Transitory Tax Policy," CESifo Working Paper Series 6958, CESifo.
    4. Timothy Besley & Torsten Persson, 2023. "The Political Economics of Green Transitions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 138(3), pages 1863-1906.
    5. Konc, Théo & Savin, Ivan & van den Bergh, Jeroen C.J.M., 2021. "The social multiplier of environmental policy: Application to carbon taxation," Journal of Environmental Economics and Management, Elsevier, vol. 105(C).
    6. Emeline Bezin, 2019. "The economics of Green consumption, cultural transmission and sustainable technological change," PSE-Ecole d'économie de Paris (Postprint) halshs-02087970, HAL.
    7. G. Grosjean & W. Acworth & C. Flachsland & R. Marschinski, 2016. "After monetary policy, climate policy: is delegation the key to EU ETS reform?," Climate Policy, Taylor & Francis Journals, vol. 16(1), pages 1-25, January.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Endogenous preferences; green transition; carbon tax; political economics; intertemporal optimisation;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • 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

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