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Research output (Journal article)

Reimund Schwarze, Georg Meran: A Theory of Optimal Green Defaults

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.

Author Reimund Schwarze, Georg Meran
Title of the article A Theory of Optimal Green Defaults
Year 2018
Journal Sustainability
Issue / Number (10) 2902

Affiliation

Division ("Fakultät") Wirtschaftswissenschaftliche Fakultät
Lehrstuhl Professur für VWL, insb. internationale Umweltökonomie

Citation

Reimund Schwarze, Georg Meran: A Theory of Optimal Green Defaults. In: Sustainability (10) 2902, 2018 .