DP17242 The Political Economics of Green Transitions
Reducing the emissions of greenhouse gases may be almost impossible without a green transition -- a process of radically changing consumption and production patterns. We put forward a dynamic model, where switches in consumption and production create a dynamic externality that can help or hinder a green transition. In democratic societies, governments cannot commit to future policy paths and must aggregate conflicting interests across different voters. Moreover, democratic politics include a range of informal activities, firm lobbying, as well as activist protests against brown firms and promotions of green firms. These different aspects of politics constrain feasible policies. We ask whether, and under what circumstances, the interaction of political forces and market forces bring about a green transition.
