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Thierry Vignolo, Jacques Percebois and Agnes dArtigues
''The time-inconsistency of alternative energy policy''
( 2007, Vol. 1 No.1 )
Time-inconsistency can arise when a government attempts to convince private sector to use a particular alternative energy (gas, green electricity...) rather than petroleum products. By introducing taxes and feed-in prices, a government would encourage firms and households to switch to an alternative energy rather than use petroleum products. However, even if a government is in favor of increasing alternative energy consumption, it can benefit from considerable financial resources resulting from petroleum product consumption. As a result of these conflicting issues, the private sector may not find the alternative energy policy credible, which prevents the government to implement a socially efficient policy.
Keywords: Time-inconsistency Energy policy Tax expenditures
JEL: A1 - General Economics: General
Manuscript Received : Mar 15 2007 Manuscript Accepted : Mar 21 2007

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