IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v147y2020ics0301421520306017.html
   My bibliography  Save this article

Carbon tax/subsidy policy choice and its effects in the presence of interest groups

Author

Listed:
  • Yu, Ping

Abstract

Interest groups, such as industry organization, public finance and environmental group, may exert influences on policy makers when they are choosing environmental policies. Considering the situation that two countries, where a domestic country suffers equal influence and a foreign country suffers different influences from these groups, can choose carbon tax policy or carbon subsidy policy. Then this paper constructs a two-staged game model to study how interest groups make differences to environmental policy choices, and their impacts on policy level, production (carbon emission), profit and welfare between countries. Results show that the domestic country will definitely choose carbon tax policy, but the foreign country may make different choices. Furthermore, if the foreign country chooses carbon subsidy policy, the domestic country will set higher tax rate than the foreign country does, but production (carbon emission), profit and welfare of the domestic country will be lower than those of the foreign country. If the foreign country chooses carbon tax policy, carbon tax rate, production (carbon emission), profit and welfare are ambiguous between countries.

Suggested Citation

  • Yu, Ping, 2020. "Carbon tax/subsidy policy choice and its effects in the presence of interest groups," Energy Policy, Elsevier, vol. 147(C).
    • Handle: RePEc:eee:enepol:v:147:y:2020:i:c:s0301421520306017
    DOI: 10.1016/j.enpol.2020.111886
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421520306017
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.enpol.2020.111886?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Gullberg, Anne Therese, 2008. "Lobbying friends and foes in climate policy: The case of business and environmental interest groups in the European Union," Energy Policy, Elsevier, vol. 36(8), pages 2954-2962, August.
    2. Lu, Chuanyi & Tong, Qing & Liu, Xuemei, 2010. "The impacts of carbon tax and complementary policies on Chinese economy," Energy Policy, Elsevier, vol. 38(11), pages 7278-7285, November.
    3. Lee, Cheng F. & Lin, Sue J. & Lewis, Charles, 2008. "Analysis of the impacts of combining carbon taxation and emission trading on different industry sectors," Energy Policy, Elsevier, vol. 36(2), pages 722-729, February.
    4. Nong, Duy, 2020. "Development of the electricity-environmental policy CGE model (GTAP-E-PowerS): A case of the carbon tax in South Africa," Energy Policy, Elsevier, vol. 140(C).
    5. Toke S. Aidt & Uk Hwang, 2014. "To Ban or Not to Ban: Foreign Lobbying and Cross‐National Externalities," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 47(1), pages 272-297, February.
    6. Larry Karp & Armon Rezai, 2014. "The Political Economy Of Environmental Policy With Overlapping Generations," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55, pages 711-733, August.
    7. Rupayan Pal, 2012. "Delegation And Emission Tax In A Differentiated Oligopoly," Manchester School, University of Manchester, vol. 80(6), pages 650-670, December.
    8. Xiao Liu & Yee Leung & Yuan Xu & Linda Chor Wing Yung, 2017. "The effect of carbon tax on carbon emission abatement and GDP: a case study," Journal of Geographical Systems, Springer, vol. 19(4), pages 399-414, October.
    9. Ouchida, Yasunori & Goto, Daisaku, 2014. "Do emission subsidies reduce emission? In the context of environmental R&D organization," Economic Modelling, Elsevier, vol. 36(C), pages 511-516.
    10. Bruvoll, Annegrete & Larsen, Bodil Merethe, 2004. "Greenhouse gas emissions in Norway: do carbon taxes work?," Energy Policy, Elsevier, vol. 32(4), pages 493-505, March.
    11. Wesseh, Presley K. & Lin, Boqiang, 2018. "Optimal carbon taxes for China and implications for power generation, welfare, and the environment," Energy Policy, Elsevier, vol. 118(C), pages 1-8.
    12. Soocheol Lee & Unnada Chewpreecha & Hector Pollitt & Satoshi Kojima, 2018. "An economic assessment of carbon tax reform to meet Japan’s NDC target under different nuclear assumptions using the E3ME model," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 20(2), pages 411-429, April.
    13. Raymond G. Batina & Gregmar I. Galinato, 2017. "The Spillover Effects of Good Governance in a Tax Competition Framework with a Negative Environmental Externality," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 67(4), pages 701-724, August.
    14. Sifiso M. Ntombela & Heinrich R. Bohlmann & Mmatlou W. Kalaba, 2019. "Greening the South Africa’s Economy Could Benefit the Food Sector: Evidence from a Carbon Tax Policy Assessment," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(2), pages 891-910, October.
    15. Brander, James A. & Spencer, Barbara J., 1985. "Export subsidies and international market share rivalry," Journal of International Economics, Elsevier, vol. 18(1-2), pages 83-100, February.
    16. Peter Erickson & Adrian Down & Michael Lazarus & Doug Koplow, 2017. "Effect of subsidies to fossil fuel companies on United States crude oil production," Nature Energy, Nature, vol. 2(11), pages 891-898, November.
    17. Godal, Odd & Holtsmark, Bjart, 2001. "Greenhouse gas taxation and the distribution of costs and benefits: the case of Norway," Energy Policy, Elsevier, vol. 29(8), pages 653-662, June.
    18. Takeshi Iida & Arijit Mukherjee, 2020. "Make and buy in a polluting industry," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(6), pages 1852-1874, December.
    19. Bansal, Sangeeta & Gangopadhyay, Shubhashis, 2003. "Tax/subsidy policies in the presence of environmentally aware consumers," Journal of Environmental Economics and Management, Elsevier, vol. 45(2, Supple), pages 333-355, March.
    20. Odd Rune Straume, 2006. "Product Market Integration and Environmental Policy Coordination in An International Duopoly," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 34(4), pages 535-563, August.
    21. Yann Duval & Stephen Hamilton, 2002. "Strategic Environmental Policy and International Trade in Asymmetric Oligopoly Markets," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 9(3), pages 259-271, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lin, Jin & Dong, Jun & Liu, Dongran & Zhang, Yaoyu & Ma, Tongtao, 2022. "From peak shedding to low-carbon transitions: Customer psychological factors in demand response," Energy, Elsevier, vol. 238(PA).
    2. Qian Zhang & Yunjia Wang & Lu Liu, 2023. "Carbon Tax or Low-Carbon Subsidy? Carbon Reduction Policy Options under CCUS Investment," Sustainability, MDPI, vol. 15(6), pages 1-26, March.
    3. Han Wang & Yujie Jin & Xingming Hong & Fuan Tian & Jianxian Wu & Xin Nie, 2022. "Integrating IPAT and CLUMondo Models to Assess the Impact of Carbon Peak on Land Use," Land, MDPI, vol. 11(4), pages 1-16, April.
    4. Lia Nersesian & Ashkan Hafezalkotob & Raziyeh Reza-Gharehbagh, 2023. "Alternative governmental carbon policies on populations of green and non-green supply chains in a competitive market," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(5), pages 4139-4172, May.
    5. Hanbo Wu & Yaxin Sun & Yutong Su & Ming Chen & Hongxia Zhao & Qi Li, 2022. "Which Is the Best Supply Chain Policy: Carbon Tax, or a Low-Carbon Subsidy?," Sustainability, MDPI, vol. 14(10), pages 1-20, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Assaad Ghazouani & Wanjun Xia & Mehdi Ben Jebli & Umer Shahzad, 2020. "Exploring the Role of Carbon Taxation Policies on CO 2 Emissions: Contextual Evidence from Tax Implementation and Non-Implementation European Countries," Sustainability, MDPI, vol. 12(20), pages 1-16, October.
    2. Ouchida, Yasunori & Goto, Daisaku, 2014. "Do emission subsidies reduce emission? In the context of environmental R&D organization," Economic Modelling, Elsevier, vol. 36(C), pages 511-516.
    3. Yasunori Ouchida & Daisaku Goto, 2022. "Strategic non‐use of the government's precommitment ability for emissions taxation: Environmental R&D formation in a Cournot duopoly," Australian Economic Papers, Wiley Blackwell, vol. 61(1), pages 181-206, March.
    4. Alberto Gago & Xavier Labandeira & Xiral López Otero, 2014. "A Panorama on Energy Taxes and Green Tax Reforms," Hacienda Pública Española / Review of Public Economics, IEF, vol. 208(1), pages 145-190, March.
    5. Lin, Boqiang & Li, Xuehui, 2011. "The effect of carbon tax on per capita CO2 emissions," Energy Policy, Elsevier, vol. 39(9), pages 5137-5146, September.
    6. Jia, Zhijie & Lin, Boqiang, 2020. "Rethinking the choice of carbon tax and carbon trading in China," Technological Forecasting and Social Change, Elsevier, vol. 159(C).
    7. Fukuda, Katsufumi & Ouchida, Yasunori, 2020. "Corporate social responsibility (CSR) and the environment: Does CSR increase emissions?," Energy Economics, Elsevier, vol. 92(C).
    8. Chen, Anping & Groenewold, Nicolaas, 2015. "Emission reduction policy: A regional economic analysis for China," Economic Modelling, Elsevier, vol. 51(C), pages 136-152.
    9. Requate, Till, 2005. "Environmental Policy under Imperfect Competition: A Survey," Economics Working Papers 2005-12, Christian-Albrechts-University of Kiel, Department of Economics.
    10. Philipp M. Richter & Marco Runkel & Robert C. Schmidt, 2021. "Strategic Environmental Policy and the Mobility of Firms," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 8(5), pages 863-893.
    11. Wesseh, Presley K. & Lin, Boqiang, 2019. "Environmental policy and ‘double dividend’ in a transitional economy," Energy Policy, Elsevier, vol. 134(C).
    12. Galindo, Luis Miguel & Beltrán, Allan & Ferrer, Jimy & Alatorre, José Eduardo, 2017. "Efectos potenciales de un impuesto al carbono sobre el producto interno bruto en los países de América Latina: estimaciones preliminares e hipotéticas a partir de un metaanálisis y una función de tran," Documentos de Proyectos 41867, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    13. Cavagnac, Michel & Cheikbossian, Guillaume, 2012. "Coalition Formation and Environmental Policies in International Oligopoly Markets," LERNA Working Papers 12.29.386, LERNA, University of Toulouse.
    14. Stefano Carattini & Simon Levin & Alessandro Tavoni, 2019. "Cooperation in the Climate Commons," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 13(2), pages 227-247.
    15. A. J. Stagliano, 2017. "Carbon Trading Reporting: The Case of Spanish Companies," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 23(2), pages 231-243, May.
    16. Genovaitė Liobikienė & Mindaugas Butkus & Kristina Matuzevičiūtė, 2019. "The Contribution of Energy Taxes to Climate Change Policy in the European Union (EU)," Resources, MDPI, vol. 8(2), pages 1-23, April.
    17. Yann Duval, 2002. "Domestic Input Policies in Free Trade Areas with National Asymmetries," Eastern Economic Journal, Eastern Economic Association, vol. 28(2), pages 241-253, Spring.
    18. Ren Yishuai & Jiang Yong & Ma Chaoqun & Liu Jianglong & Chen Jing, 2021. "Will Tax Burden Be a Stumbling Block to Carbon-Emission Reduction? Evidence from OECD Countries," Journal of Systems Science and Information, De Gruyter, vol. 9(4), pages 335-355, August.
    19. Bhattacharya, Rabindra N. & Pal, Rupayan, 2010. "Environmental standards as strategic outcomes: A simple model," Resource and Energy Economics, Elsevier, vol. 32(3), pages 408-420, August.
    20. Di Cosmo, Valeria & Hyland, Marie, 2013. "Carbon tax scenarios and their effects on the Irish energy sector," Energy Policy, Elsevier, vol. 59(C), pages 404-414.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:147:y:2020:i:c:s0301421520306017. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.