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Main Title: A Theory of Optimal Green Defaults
Author(s): Meran, Georg
Schwarze, Reimund
Type: Article
Language Code: en
Abstract: This paper develops an analytical framework for studying the Baumol–Oates efficiency of traditional single instrument abatement policies vis-à-vis green defaults in the face of price inertia and passive choice by subpopulations. In this special case of behavioural heterogeneity, command and control approaches can outperform price-based instruments while pure tax/subsidy schemes need to be adjusted in order to achieve politically 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 optimize the green defaults and traditional policies of standards and prices under different degrees of market rigidity.
Issue Date: 16-Aug-2018
Date Available: 10-Sep-2019
DDC Class: 330 Wirtschaft
Subject(s): nudge
policy mix
behavioural heterogeneity
environmental taxes and subsidies
Sponsor/Funder: EC/H2020/653255/EU/PLAtform for Climate Adaptation and Risk reDuction/PLACARD
Journal Title: Sustainability
Publisher: MDPI
Publisher Place: Basel
Volume: 10
Issue: 8
Article Number: 2902
Publisher DOI: 10.3390/su10082902
EISSN: 2071-1050
Appears in Collections:FG Volkswirtschaftlehre, Wirtschaftspolitik und Umweltökonomie » Publications

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