Buying versus leasing fuel deposits for preservation

Konferenzbeitrag

In a two-period model with two groups of countries that extract, trade and consume fossil fuel, a climate coalition fights against climate damage by purchasing or leasing deposits to prevent their extraction, and seeks to manipulate the fuel prices in its favor. The deposit-purchase policy is inefficient since it leaves the first-period climate damage externality non-internalized, which is in stark contrast to the efficiency of the deposit-purchase policy in static models. However, for a proper subset of economies the deposit-lease policy turns out to be efficient. It internalizes the climate damage externalities and makes strategic action in the fuel markets ineffective. Finally, we compare the deposit-lease policy and the deposit-purchase policy. If strategic action pays in the fuel markets and the coalition imports fuel, a transition from the deposit-purchase policy to the deposit-lease policy increases [decreases] total welfare if the climate damage is large [small].

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2018: Digitale Wirtschaft - Session: Environmental Economics IV ; No. D06-V2

Classification and Topics

• Classification: Wirtschaft ; International Institutional Arrangements ; Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies ; Climate; Natural Disasters and Their Management; Global Warming ; Environmental Economics: Government Policy
• Subject: fossil fuel ; deposit ; deposit-lease policy ; deposit-purchase policy ; fuel cap

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Eichner, Thomas ; Kollenbach, Gilbert ; Schopf, Mark
• Event: Veröffentlichung
• (who): ZBW - Leibniz-Informationszentrum Wirtschaft
• (where): Kiel, Hamburg
• (when): 2018

Further information

• Handle: http://hdl.handle.net/10419/181597
• Last update: 10.03.2025, 11:44 AM CET