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Preventing environmental disasters : market based vs command and control policies

Author

Listed:
  • Francesco Lamperti

    (Institute of Economics, Scuola Superiore Sant'Anna)

  • Mauro Napoletano

    (OFCE Sciences Po and Skema Businnes School)

  • Andrea Roventini

    (Institute of Economics, Scuola Superiore Sant'Anna)

Abstract
The aper compares the e?ects of market-based and command-and-control climate policies on the direction of technical change and the prevention of environmental disasters. Drawing on the model proposed in Acemoglu et al. (2012, American Economic Review), we show that market-based policies (carbon taxes and subsidies towards clean sectors) exhibit bounded win- dow of opportunities: delays in their implementation make them completely ine?ective both in redirecting technical change and in avoiding environmental catastrophes. On the contrary, we ?nd that command-and-control interventions guarantee policy e?ectiveness irrespectively on the timing of their introduction. As command-and-control policies are always able to direct technical change toward "green" technologies and to prevent climate disasters, they constitute a valuable alternative to market-based interventions

Suggested Citation

  • Francesco Lamperti & Mauro Napoletano & Andrea Roventini, 2015. "Preventing environmental disasters : market based vs command and control policies," Documents de Travail de l'OFCE 2015-31, Observatoire Francais des Conjonctures Economiques (OFCE).
    • Handle: RePEc:fce:doctra:1531
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    File URL: http://www.ofce.sciences-po.fr/pdf/dtravail/WP2015-31.pdf
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    References listed on IDEAS

    as
    1. Li, Zhe & Sun, Jianfei, 2015. "Emission taxes and standards in a general equilibrium with entry and exit," Journal of Economic Dynamics and Control, Elsevier, vol. 61(C), pages 34-60.
    2. Stern,Nicholas, 2007. "The Economics of Climate Change," Cambridge Books, Cambridge University Press, number 9780521700801, October.
    3. Daron Acemoglu & Ufuk Akcigit & Douglas Hanley & William Kerr, 2016. "Transition to Clean Technology," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 52-104.
    4. Joseph S. Shapiro & Reed Walker, 2018. "Why Is Pollution from US Manufacturing Declining? The Roles of Environmental Regulation, Productivity, and Trade," American Economic Review, American Economic Association, vol. 108(12), pages 3814-3854, December.
    5. repec:zbw:bofrdp:2015_026 is not listed on IDEAS
    6. repec:zbw:bofrdp:urn:nbn:fi:bof-201512101465 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Marco Raberto & Bulent Ozel & Linda Ponta & Andrea Teglio & Silvano Cincotti, 2019. "From financial instability to green finance: the role of banking and credit market regulation in the Eurace model," Journal of Evolutionary Economics, Springer, vol. 29(1), pages 429-465, March.
    2. Jongmin Yu & Seokjong Ryu, 2018. "Optimal Design of a Politically Feasible Environmental Regulation," Korean Economic Review, Korean Economic Association, vol. 34, pages 75-99.
    3. Lamperti, F. & Dosi, G. & Napoletano, M. & Roventini, A. & Sapio, A., 2018. "Faraway, So Close: Coupled Climate and Economic Dynamics in an Agent-based Integrated Assessment Model," Ecological Economics, Elsevier, vol. 150(C), pages 315-339.
    4. Stanislao Gualdi & Antoine Mandel, 2019. "Endogenous growth in production networks," Journal of Evolutionary Economics, Springer, vol. 29(1), pages 91-117, March.
    5. Monasterolo, Irene & Raberto, Marco, 2018. "The EIRIN Flow-of-funds Behavioural Model of Green Fiscal Policies and Green Sovereign Bonds," Ecological Economics, Elsevier, vol. 144(C), pages 228-243.

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    More about this item

    Keywords

    Environmental Policy; Command and Control; Carbon Taxes; Disasters;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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