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Some Distributional Issues in Greenhouse Gas Policy Design

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  • Freebairn, John W.

Abstract

The paper argues from first principles and with supporting related empirical evidence that most of the final incidence of emissions taxes or tradable permits will fall on consumers of greenhouse gas intensive products. This distributional outcome supports an emissions reduction strategy of an emissions tax or auctioning the tradable permits, rather than gifting permits in a grandfather arrangement to current polluters as was done in Europe and has currency with proposals for Australia. Greenhouse gas emissions and climate change is a global pollution problem that gives rise to a prisoner’s dilemma problem in which the global cooperative solution in undermined by individual countries free-riding. Some of the issues and challenges to be overcome to reach a cooperative global policy package are discussed, including the different interests and perspectives of developed and developing countries.

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File URL: http://purl.umn.edu/6770
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Bibliographic Info

Paper provided by Australian Agricultural and Resource Economics Society in its series 2008 Conference (52nd), February 5-8, 2008, Canberra, Australia with number 6770.

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Date of creation: 2008
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Handle: RePEc:ags:aare08:6770

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Related research

Keywords: Environmental Economics and Policy;

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References

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  1. Creedy, John & Sleeman, Catherine, 2006. "Carbon taxation, prices and welfare in New Zealand," Ecological Economics, Elsevier, vol. 57(3), pages 333-345, May.
  2. Popp, David, 2006. "Innovation in climate policy models: Implementing lessons from the economics of R&D," Energy Economics, Elsevier, vol. 28(5-6), pages 596-609, November.
  3. A.L. Bovenberg & Lawrence H. Goulder & Derek J. Gurney, 2003. "Efficiency Costs of Meeting Industry-Distributional Constraints under Environmental Permits and Taxes," NBER Working Papers 10059, National Bureau of Economic Research, Inc.
  4. Warwick J McKibbin, 2007. "The 2006 Sir Leslie Melville Lecture: From National to International climate Change Policy," CAMA Working Papers 2007-30, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  5. William D. Nordhaus, 2006. "The "Stern Review" on the Economics of Climate Change," NBER Working Papers 12741, National Bureau of Economic Research, Inc.
  6. Dixon, Peter B. & Rimmer, Maureen T., 2000. "The Government/Democrats' package of changes in indirect taxes," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 44(1), March.
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Cited by:
  1. John Freebairn, 2009. "Should Households and Businesses Receive Compensation for the Costs of Greenhouse Gas Emissions?," Department of Economics - Working Papers Series 1071, The University of Melbourne.

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