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Energy subsidies and policy commitment in political equilibrium
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Pani, Marco and Perroni, Carlo (2018) Energy subsidies and policy commitment in political equilibrium. Energy Economics, 71 . pp. 149-160. doi:10.1016/j.eneco.2017.12.013 ISSN 0140-9883.
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Official URL: http://dx.doi.org/10.1016/j.eneco.2017.12.013
Abstract
Because non-renewable energy subsidies affect incentives for investing in energy-saving technologies, they entail a classic investment hold-up problem: once investment has taken place, policymakers will tend to overuse them for distributional reasons, which will in turn depress investment by forward-looking agents. Reforming energy subsidies thus requires overcoming a policy commitment problem. In this paper we show that, even when commitment is feasible, it may fail to materialize in a political equilibrium due to politicians’ re-election incentives. In particular, it will be those politicians who are comparatively less favorable to energy subsidies who may fail to commit to phase them out.
Item Type: | Journal Article | ||||||||
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Subjects: | H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management | ||||||||
Divisions: | Faculty of Social Sciences > Economics | ||||||||
Library of Congress Subject Headings (LCSH): | Energy industries -- Subsidies, Electric utilities -- Subsidies, Energy policy -- Economic aspects, Political candidates -- Attitudes | ||||||||
Journal or Publication Title: | Energy Economics | ||||||||
Publisher: | Elsevier BV | ||||||||
ISSN: | 0140-9883 | ||||||||
Official Date: | March 2018 | ||||||||
Dates: |
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Volume: | 71 | ||||||||
Page Range: | pp. 149-160 | ||||||||
DOI: | 10.1016/j.eneco.2017.12.013 | ||||||||
Status: | Peer Reviewed | ||||||||
Publication Status: | Published | ||||||||
Access rights to Published version: | Restricted or Subscription Access | ||||||||
Date of first compliant deposit: | 8 January 2018 | ||||||||
Date of first compliant Open Access: | 23 December 2018 | ||||||||
RIOXX Funder/Project Grant: |
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