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Forskningsartikel2022Vetenskapligt granskadÖppen tillgång

The black paradox

Hart, Rob; Gars, Johan


We model competition between an oil monopolist and competitive suppliers of coal and renewable energy in a dynamic general equilibrium framework. We show that market power- which disrupts the order of extraction-may lead to higher long-run emissions by encouraging early extraction of dirty fuels such as coal which would otherwise remain in the ground permanently; simply banning coal burning may be better than Pigovian taxation. Market power can of course be corrected by production subsidies to the monopolist, but when distribution affects welfare a better option is to offer subsidies to renewable energy, which force the oil monopolist to reduce her (limit) price but are never actually paid out.


Market power; OPEC; Coal; Climate change

Publicerad i

European Economic Review
2022, Volym: 148, artikelnummer: 104211Utgivare: ELSEVIER

    Globala målen

    SDG7 Hållbar energi för alla
    SDG12 Hållbar konsumtion och produktion

    UKÄ forskningsämne


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