"Buy Coal! A Case for Supply-Side Environmental Policy" *
Free-riding is at the core of environmental problems. If a climate coalition reduces its emissions, world prices change and nonparticipants typically emit more; they may also extract the dirtiest type of fossil fuel and invest too little in green technology. The coalition's second-best policy distorts trade and is not time consistent. However, suppose that the countries can trade the rights to exploit fossil-fuel deposits: As soon as the market clears, the above-mentioned problems vanish and the first-best is implemented. In short, the coalition's best policy is to simply buy foreign deposits and conserve them.
The Nomination Committee, composed by Thomas Aronsson (chair), Christa Brunnschweiler and Michael Hoel, has awarded this paper for the following motivation: [ Ссылка ]
*Published on Journal of Political Economy 120, 77-115, 2012.
