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I mean it actually isn’t that simple. In a market with significant inelasticity in demand you’d certainly see the price rise if they pressed the stop button, bu
by CPLX 7y ago
I mean it actually isn’t that simple. In a market with significant inelasticity in demand you’d certainly see the price rise if they pressed the stop button, but the decline in consumption in the short term wouldn’t be as severe. As long as there’s other places to get the product the market would adjust to meet that demand.
Granted in the long term higher prices would help a lot, but a tax at the point of demand/consumption would likely work a whole lot more cleanly.
- BOOSTERHIDROGEN 7y agoThat is interesting explanation, any references about inelasticity ?
- deleted 7y ago[deleted]
- tobias3 7y agoYeah, everything every individual or even individual country does doesn't matter in the grand scheme. That's kind of the problem (tragedy of the commons). One way to break the tragedy of commons is to lead by example, take the societal high ground, pressure others to join and finally shun everybody that doesn't participate. E.g. Norway could press the stop button, they'd be poorer (but other countries aren't lucky and don't have any oil) it wouldn't reduce CO2 output much over the short term, but maybe that would put other countries on the path to do it as well. In general the more upstream the taxation the easier to implement (it would be easy to simply tax the oil an oil rig produces), while the tax income would be probably fairer distributed if the tax is at the more consumption level/downstream.