Full Title: Green Industrial Policy Trade and Theory
Author(s): Larry Karp, Megan Stevenson
Publisher(s): The World Bank Development Research Group Environment and Energy Team & Sustainable Development Network Office of the Chief Economist
Publication Date: 10/2012



This paper studies the reality and the potential for green  industrial policy. It provides a summary of the green  industrial policies, broadly understood, for five countries.  It then considers the relation between green industrial  policies and trade disputes, emphasizing the Brazil-  United States dispute involving ethanol and the broader  United States-China dispute. The theory of public policy provides many lessons for green industrial policy. The  authors highlight four of these lessons, involving the  Green Paradox, the choice of quantities versus prices with  endogenous investment, the coordination issues arising  from emissions control, and the ability of green industrial  policies to promote cooperation in reducing a global public bad like carbon emissions.