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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

    (Swiss Federal Office of Energy (SFOE))

  • 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:563

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  1. Messerlin, Patrick A., 2010. "Climate change and trade policy : from mutual destruction to mutual support," Policy Research Working Paper Series 5378, The World Bank.
  2. Moore, Michael O., 2010. "Implementing carbon tariffs : a fool's errand ?," Policy Research Working Paper Series 5359, The World Bank.
  3. Weitzman, Martin L, 1974. "Prices vs. Quantities," Review of Economic Studies, Wiley Blackwell, vol. 41(4), pages 477-91, October.
  4. Robert W. Hahn & Robert N. Stavins, 2011. "The Effect of Allowance Allocations on Cap-and-Trade System Performance," Journal of Law and Economics, University of Chicago Press, vol. 54(S4), pages S267 - S294.
  5. Josh Ederington, Arik Levinson & Jenny Minier, 2003. "Footlose and Pollution Free," Working Papers gueconwpa~03-03-04, Georgetown University, Department of Economics.
  6. Yan Dong & John Whalley, 2008. "Carbon, Trade Policy, and Carbon Free Trade Areas," NBER Working Papers 14431, National Bureau of Economic Research, Inc.
  7. Jean-Marie Grether & Nicole Andréa Mathys & Jaime de Melo, 2012. "Unravelling the worldwide pollution haven effect," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 21(1), pages 131-162, December.
  8. Nicole A. MATHYS & Jaime de MELO, 2010. "Trade and Climate Change: The Challenges Ahead," Working Papers P14, FERDI.
  9. repec:reg:rpubli:47 is not listed on IDEAS
  10. 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.
  11. 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.
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