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The Political Economy of Climate Change Policies: Political Economy Aspects of Climate Change Mitigation Efforts

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  • Nicole A. MATHYS

    (Office fédéral suisse de l'énergie (OFEN))

  • Jaime de MELO

    ()
    (Ferdi)

Abstract

Regardless of the policies used to mitigate climate change, a positive and relatively high price of carbon will have to be established, with slow convergence across regions, leading to huge rents up to capture, way beyond those that have been fought over in the GATT-based international trading system. The paper explores the political-economy, feasibility and desirability implications of the two main alternatives, a carbon tax and a cap-and-trade (CAT) system. Having the same concerns, CAT systems in the EU and the US have accounted for different outcomes in each case. Likely leakages under foreseeable carbon prices are estimated to be small and not of an order of magnitude justifying the special allowances sought across a wide spectrum of industries.

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Bibliographic Info

Paper provided by FERDI in its series Working Papers with number P24.

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Date of creation: Aug 2011
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Handle: RePEc:fdi:wpaper:562

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Phone: +33473177542
Web page: http://ferdi.fr/
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  1. Nicole A. MATHYS & Jaime de MELO, 2010. "Trade and Climate Change: The Challenges Ahead," Working Papers P14, FERDI.
  2. Jean-Marie Grether & Nicole A. Mathys & Jaime de Melo, 2006. "Unraveling the World-Wide Pollution Haven Effect," Working Papers 2006.122, Fondazione Eni Enrico Mattei.
  3. Robert W. Hahn & Robert N. Stavins, 2010. "The Effect of Allowance Allocations on Cap-and-Trade System Performance," NBER Working Papers 15854, National Bureau of Economic Research, Inc.
  4. Josh Ederington & Arik Levinson & Jenny Minier, 2005. "Footloose and Pollution-Free," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 92-99, February.
  5. Moore, Michael O., 2010. "Implementing carbon tariffs : a fool's errand ?," Policy Research Working Paper Series 5359, The World Bank.
  6. repec:reg:rpubli:47 is not listed on IDEAS
  7. Yan Dong & John Whalley, 2008. "Carbon, Trade Policy, and Carbon Free Trade Areas," NBER Working Papers 14431, National Bureau of Economic Research, Inc.
  8. David Wheeler, 2008. "Why Warner-Lieberman Failed and How to Get America’s Working Families behind the Next Cap-and-Trade Bill," Working Papers 149, Center for Global Development.
  9. Messerlin, Patrick A., 2010. "Climate change and trade policy : from mutual destruction to mutual support," Policy Research Working Paper Series 5378, The World Bank.
  10. M. L. Weitzman, 1973. "Prices vs. Quantities," Working papers 106, Massachusetts Institute of Technology (MIT), Department of Economics.
  11. Atkinson, Giles & Hamilton, Kirk & Ruta, Giovanni & Van Der Mensbrugghe, Dominique, 2010. "Trade in'virtual carbon': empirical results and implications for policy," Policy Research Working Paper Series 5194, The World Bank.
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