Carrot and Stick: Collateral Effects of Green Public Policy
Vera Danilina  1, *@  , Federico Trionfetti  1@  
1 : Aix-Marseille University, Aix-Marseille School of Economics  (AMU, AMSE)  -  Site web
Aix-Marseille Shool of Economics
Aix-Marseille Université Jardins du Pharo58 Boulevard Charles Livon13284 Marseille cedex 7 -  France
* : Auteur correspondant

Green public policy goals can be met by a wide range of instruments, which invites a comprehensive analysis of their direct and collateral effects. This study is focused on the two regulatory instruments, emission taxes and green public procurement, which differ in compulsion and type of impact. We provide a general equilibrium analysis in order to investigate welfare and environmental outcomes of the both green policies in autarky and upon trade integration. The model uses two sources of heterogeneity - across firms in regard to their productivity and across countries in regard to the type and stringency of environmental policy. We show that while taxation yields more quantitatively significant social and ecological effects, green public procurement is more efficient in environmental damage reduction per unit of welfare loss. Exposure to international trade delivers inconclusive results when countries with lower taxation and higher eco-bias in government purchases face increasing emissions and welfare. Countries with higher taxation and lower eco-bias in government purchases experience decreasing emissions and welfare. Meanwhile, trade integration unambiguously favours trading partners if they introduce identical taxation or green public procurement programmes. 


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