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General equilibrium effects of environmental policy: A CGE-modeling approach

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  • Lars Bergman
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    Abstract

    Estimation of emission control cost functions is often carried out in a partial equilibrium framework, i.e., under the assumption that emission control measures have negligible effects on input and output prices. In this paper a computable general equilibrium model is used for simulation of the impact on factor prices and resource allocation of reductions of SO infx sup- , NO infx su- and CO 2-emissions. Thus the model includes markets for tradable emission permits, and the equilibrium prices of permits reflect the marginal costs of emission control. The results suggest that major emission reductions are likely to have general equilibrium effects, and thus that emission control cost functions that fail to take these effects into account may give a distorted picture of the economic impact of emission control. Copyright Kluwer Academic Publishers 1991

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    File URL: http://hdl.handle.net/10.1007/BF00305950
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    Bibliographic Info

    Article provided by European Association of Environmental and Resource Economists in its journal Environmental & Resource Economics.

    Volume (Year): 1 (1991)
    Issue (Month): 1 (March)
    Pages: 43-61

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    Handle: RePEc:kap:enreec:v:1:y:1991:i:1:p:43-61

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    Web page: http://www.springerlink.com/link.asp?id=100263

    Related research

    Keywords: Carbon taxation; environmental control cost function; computable general equilibrium;

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    1. Haaland, Jan I, et al, 1987. " VEMOD: A Ricardo-Heckscher-Ohlin-Jones Model of World Trade," Scandinavian Journal of Economics, Wiley Blackwell, vol. 89(3), pages 251-70.
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