How Effective are Emission Taxes in an Open Economy?
AbstractThis paper compares emission taxes with other taxes from the viewpoint of emission reduction in an open economy. Using a simple monopoly model, we show that emission taxes may not be very effective to protect environment because of the spillover effects between markets stemming from non-constant marginal costs and transboundary externalities. Other taxes such as production taxes and tariffs are more effective under certain conditions. Thus, an easy application of emission taxes should be discreet in the open economy framework.
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Bibliographic InfoPaper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 06007.
Length: 13 pages
Date of creation: Mar 2006
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Other versions of this item:
- Jota Ishikawa & Tomohiro Kuroda, 2007. "How Effective are Emissions Taxes in an Open Economy?," Review of Development Economics, Wiley Blackwell, vol. 11(2), pages 359-368, 05.
- NEP-ALL-2006-03-18 (All new papers)
- NEP-ENE-2006-03-18 (Energy Economics)
- NEP-ENV-2006-03-18 (Environmental Economics)
- NEP-PBE-2006-03-18 (Public Economics)
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