Energy Tariffs, Production, and Income in a Small Open Economy
AbstractA tariff on imported energy in a small open economy alters production, redistributes income, and generates tariff revenue. The present paper includes tariff revenue in a general equilibrium economy producing two traded goods with imported energy and domestic capital and labor. An energy tariff reduces energy intensive output and domestic factor income but payment to one domestic factor may rise as might the other output. Tariff revenue, not included in the related theoretical literature, is shown to be concave in the tariff. A simulation illustrates these general equilibrium properties including the revenue maximizing tariff.
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Bibliographic InfoPaper provided by Department of Economics, Auburn University in its series Auburn Economics Working Paper Series with number auwp2013-11.
Date of creation: Aug 2013
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Energy Tariffs; Tariff Revenue; General Equilibrium;
Find related papers by JEL classification:
- F11 - International Economics - - Trade - - - Neoclassical Models of Trade
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