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Investment subsidies and Time-Consistent Environmental Policy

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  • Lisandro Abrego
  • Carlo Perroni

Abstract

We describe a model of dynamic pollution abatement choices with heterogeneous agents where, due to the presence of a distributional objective and to the absence of incentive-compatible compensation mechanisms, the choice of a second-best level of emission taxation is time-inconsistent. In this model, we investigate whether investment subsidies can act as a substitute for policy commitment. Copyright 2002, Oxford University Press.

Suggested Citation

  • Lisandro Abrego & Carlo Perroni, 2002. "Investment subsidies and Time-Consistent Environmental Policy," Oxford Economic Papers, Oxford University Press, vol. 54(4), pages 617-635, October.
    • Handle: RePEc:oup:oxecpp:v:54:y:2002:i:4:p:617-635
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    More about this item

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation

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