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The Political Economics of Green Transitions: Optimal Intertemporal Policy Response

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Dögnitz,  Lorenz
External Organizations;

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Konc,  Theo       
Potsdam Institute for Climate Impact Research;

/persons/resource/Linus.Mattauch

Mattauch,  Linus
Potsdam Institute for Climate Impact Research;

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31602.pdf
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Dögnitz, L., Konc, T., Mattauch, L. (2024): The Political Economics of Green Transitions: Optimal Intertemporal Policy Response, (Berlin School of Economics Discussion Papers ; 47), Berlin : Berlin School of Economics, 37 p.
https://doi.org/10.48462/opus4-5596


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Besley and Persson (2023) pioneer a political economy model of a green transition with changing preferences. Here we solve for the optimal policy intervention and find that the optimal tax on the polluting good starts high and is subsequently declining, to support the transition in preferences. We quantify the welfare loss of ignoring preference changes.