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Energy pricing impact on domestic economy under recent climate action

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  • Sakamoto, Tomoyuki
  • Managi, Shunsuke

Abstract

This article analyzes the adverse competitive effect of climate policy on domestic supply using industry-level data from forty countries. In accordance with the theoretical literature, we define the competitive effect as the difference between the energy price elasticities of demand and supply; the magnitude of the competitive effect is captured by estimating the supply and demand functions. We find adverse competitive effects for certain country–industry pairs; however, these impacts are small. Additional simulation analysis shows potential for substitution between an imported product and a domestic good in less energy-intensive sectors. The results indicate the importance of considering industrial characteristics when formulating and implementing a climate policy.

Suggested Citation

  • Sakamoto, Tomoyuki & Managi, Shunsuke, 2015. "Energy pricing impact on domestic economy under recent climate action," Economic Analysis and Policy, Elsevier, vol. 48(C), pages 150-162.
    • Handle: RePEc:eee:ecanpo:v:48:y:2015:i:c:p:150-162
    DOI: 10.1016/j.eap.2015.11.005
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    Cited by:

    1. Halkos, George & Managi, Shunsuke & Tsilika, Kyriaki, 2017. "Evaluating a continent-wise situation for capital data," Economic Analysis and Policy, Elsevier, vol. 55(C), pages 57-74.

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