tWhile the report of former ECB president Mario Draghi calls on the European Union to invest 800 billion euros to improve the competitiveness of member states, the European Commission asks France to reduce its spending due to a “excessive deficit”. Although the same report highlights that “Political sustainability could be threatened if decarbonization leads to deindustrialization”COP29 notes with regret that the goal of global warming below + 1.5°C already appears out of reach…
These contradictory mandates lead some to call for the implementation of a “climate war economy”thus highlighting that the climate effort, like the war effort, requires a rapid and massive reallocation of resources, while limiting the cost of the transition to establish its social acceptability. This parallel invites us to question the relevance of the methods implemented during World War II.
One of them was price control. But this economic policy tool acts as a repellent for many economists, although its use was widespread during the “thirty glorious years.” Several prices remain controlled: medicines, bank charges, etc. However, the dominant conception remains that price control necessarily leads to shortages and requires an enormous bureaucratic apparatus.
But this is only true under certain conditions, particularly the existence of competitive markets and diminishing returns. Furthermore, price control cannot be reduced to a price lock.. It is entirely possible to consider sliding scales that include minimum prices and maximum prices. The tariff shield that came into force in October 2021 constitutes a partial price control mechanism.
Social reach
2001 Nobel laureate Joseph Stiglitz recently proposed using “non-linear” pricing to combat rising energy prices. This system varies the price paid depending on the quantity consumed. In the eyes of economists, it has the advantage of modifying behavior by using incentives rather than restrictions.
Let’s take the example of electricity, part of whose production will have to respond to the decrease in the fleet of thermal vehicles. Non-linear pricing consists of charging a household a price per kilowatt hour that varies depending on its consumption. Let’s imagine that for a couple with two children in an energy class D home, the consumption defined as “normal” is 12,000 kilowatt hours per year. The first 12,000 kilowatt hours consumed are billed at 0.21 euros (off-peak rate). But between 12,000 and 14,000 kilowatt hours, the price rises to 0.27 euros (peak hour rate), and then increases exponentially. A measure of this type encourages all households to save energy, while having a social impact.
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