Working Paper: CEPR ID: DP17242
Authors: Tim Besley; Torsten Persson
Abstract: Reducing the emissions of greenhouse gases may be almost impossible without a green transition -- a process of radically changing consumption and production patterns. We put forward a dynamic model, where switches in consumption and production create a dynamic externality that can help or hinder a green transition. In democratic societies, governments cannot commit to future policy paths and must aggregate conflicting interests across different voters. Moreover, democratic politics include a range of informal activities, firm lobbying, as well as activist protests against brown firms and promotions of green firms. These different aspects of politics constrain feasible policies. We ask whether, and under what circumstances, the interaction of political forces and market forces bring about a green transition.
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JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Political forces + Market forces (P19) | Green transition (P28) |
| Lack of commitment in democratic politics (D72) | Effective policy implementation (D78) |
| Green consumers increase (Q56) | Profitability of green technologies (Q55) |
| Profitability of green technologies (Q55) | Adoption of green practices by firms (Q52) |
| Initial share of green consumers low (D16) | Profitability of green technologies low (Q55) |
| Low profitability of green technologies (Q55) | Stagnation in green transition (P18) |
| Positive shifts in consumer values (D16) | Positive shifts in firm behavior (D21) |
| Positive shifts in firm behavior (D21) | Positive shifts in consumer values (D16) |