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Tuesday, January 23th2024

Emmanuelle Taugourdeau (CREST-Polytechnique) will presenta “Does leadership in policy setting reduce pollution and make countries better off?”.

Abstract:

We analyse whether there exists a first mover and/or a second mover (dis)advantage in a game where a more industrialized country -the leader- and a less industrialized country -the follower- decide on two policy instruments (profit taxation and environmental regulation) to raise their tax income while limiting the damage from pollution. We show that when governments care about world emissions, they can use a sequential game to reach their national goals and reduce the level of world emissions, even if industrial leakage occurs. This is no longer the case when emissions are considered solely as local.