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Carbon taxes, industrial production, welfare and the environment

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  • Wesseh, Presley K.
  • Lin, Boqiang
  • Atsagli, Philip

Abstract

Conventional wisdom holds that, ignoring environmental benefits, carbon taxes should adversely affect low-income countries more than they should affect high-income regions. Simulating various ranges of optimal carbon taxes and testing their impacts, this study draws an opposite conclusion to the above assertion. However, when the model is adjusted to reflect benefits from environmental cleanup, carbon taxes create welfare gains in all regions except for low-income countries. In addition, implementing carbon taxes reduces environmental damages by approximately 50% in absolutely all the six regions considered. Notwithstanding the existence of a tradeoff between welfare and environment for low-income countries implies that energy conservation policies aimed at lowering greenhouse gas emissions would leave people worse-off in these countries.

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  • Wesseh, Presley K. & Lin, Boqiang & Atsagli, Philip, 2017. "Carbon taxes, industrial production, welfare and the environment," Energy, Elsevier, vol. 123(C), pages 305-313.
    • Handle: RePEc:eee:energy:v:123:y:2017:i:c:p:305-313
    DOI: 10.1016/j.energy.2017.01.139
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    Cited by:

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    5. Pinglin He & Lu Chen & Xiaonan Zou & Shufeng Li & Huayu Shen & Jianhui Jian, 2019. "Energy Taxes, Carbon Dioxide Emissions, Energy Consumption and Economic Consequences: A Comparative Study of Nordic and G7 Countries," Sustainability, MDPI, vol. 11(21), pages 1-17, November.
    6. Xuexian Gao & Haidong Zheng & Yan Zhang & Naser Golsanami, 2019. "Tax Policy, Environmental Concern and Level of Emission Reduction," Sustainability, MDPI, vol. 11(4), pages 1-17, February.
    7. Li, Tianxiao & Liu, Pei & Li, Zheng, 2020. "Quantitative relationship between low-carbon pathways and system transition costs based on a multi-period and multi-regional energy infrastructure planning approach: A case study of China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 134(C).
    8. Wu, T. & Thomassin, P.J., 2018. "The Impact of Carbon Tax on Food Prices and Consumption in Canada," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 275913, International Association of Agricultural Economists.
    9. Wenwen Zhang & Shichun Xu & Zhengxia He & Basil Sharp & Bin Zhao & Shuxiao Wang, 2019. "Impacts of U.S. Carbon Tariffs on China’s Foreign Trade and Social Welfare," Sustainability, MDPI, vol. 11(19), pages 1-21, September.
    10. Chang, Kai & Long, Yu & Yang, Jiahui & Zhang, Huijia & Xue, Chenqi & Liu, Jianing, 2022. "Effects of subsidy and tax rebate policies on green firm research and development efficiency in China," Energy, Elsevier, vol. 258(C).
    11. Tatiana PÃŽÅžCHINA & Romeo Fortuna, 2018. "Economic Growth Though Competitive Advantage and Specialization: the Example of Winemaking in Moldova," European Journal of Economics and Business Studies Articles, Revistia Research and Publishing, vol. 4, January -.
    12. Chang-Jing Ji & Yu-Jie Hu & Bao-Jun Tang, 2018. "Research on carbon market price mechanism and influencing factors: a literature review," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 92(2), pages 761-782, June.
    13. Danzhu Liu & Jinqiang Liang & Shuliang Xu & Mao Ye, 2023. "Analysis of Carbon Emissions Embodied in the Provincial Trade of China Based on an Input–Output Model and k-Means Algorithm," Sustainability, MDPI, vol. 15(12), pages 1-17, June.
    14. Ifft, Jennifer E. & Spini, Pietro & Wilcox, Steven, 2018. "The distributional implications of carbon taxation for U.S. crop farms," 2018 Annual Meeting, August 5-7, Washington, D.C. 274423, Agricultural and Applied Economics Association.
    15. Lin, Boqiang & Jia, Zhijie, 2018. "Impact of quota decline scheme of emission trading in China: A dynamic recursive CGE model," Energy, Elsevier, vol. 149(C), pages 190-203.
    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.

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