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Abstinence with Reputation Loss, Understating Expectations and Guiltand the Effectiveness of Emission Tax

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Abstract

The responsibility for, and consequences of, greenhouse gas emissions are shared by all countries, but only a few are willing to tax emissions. The paper argues that the reactions of the abstaining countries are crucial for assessing the effectiveness of the tax. The paper analyzes an interaction between a tax-collecting and investing coalition of rich countries, abstaining rich countries and poor countries. The non-coalition countries might have loss of reputation and guilt and overstate the tax’s emission-moderating effect. As long as these three types of countries react to their counterparts’ emissions, taxing emissions does not necessarily reduce the global emissions.

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File URL: http://www.uow.edu.au/content/groups/public/@web/@commerce/@econ/documents/doc/uow099927.pdf
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Bibliographic Info

Paper provided by School of Economics, University of Wollongong, NSW, Australia in its series Economics Working Papers with number wp11-01.

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Length: 12 pages
Date of creation: 2011
Date of revision:
Handle: RePEc:uow:depec1:wp11-01

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Postal: School of Economics, University of Wollongong, Northfields Avenue, Wollongong NSW 2522 Australia
Phone: +612 4221-3659
Fax: +612 4221-3725
Web page: http://business.uow.edu.au/econ/index.html
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Keywords: Emission Tax; Abstinence; Understating Expectations; Guilt; Global Emissions;

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References

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  1. Pizer, William & Newell, Richard, 1998. "Regulating Stock Externalities Under Uncertainty," Discussion Papers dp-99-10-rev, Resources For the Future.
  2. Hoel, Michael & Karp, Larry, 2002. "Taxes versus quotas for a stock pollutant," Resource and Energy Economics, Elsevier, vol. 24(4), pages 367-384, November.
  3. Fischer, Carolyn & Newell, Richard, 2004. "Environmental and Technology Policies for Climate Mitigation," Discussion Papers dp-04-05, Resources For the Future.
  4. Selden Thomas M. & Song Daqing, 1994. "Environmental Quality and Development: Is There a Kuznets Curve for Air Pollution Emissions?," Journal of Environmental Economics and Management, Elsevier, vol. 27(2), pages 147-162, September.
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Cited by:
  1. Amnon Levy, 2011. "Emission-Photosynthesis Imbalance and Climate Change:Forest Land under Intensified Uncertainty and Expected Utility Maximization," Economics Working Papers wp11-08, School of Economics, University of Wollongong, NSW, Australia.
  2. Amnon Levy, 2012. "A Stock Targeting International Carbon-Tax Rule with Uncertainty and Diminishing Compliance," Economics Working Papers wp12-09, School of Economics, University of Wollongong, NSW, Australia.
  3. Amnon Levy, 2011. "Introduction to the Economics of Atmospheric Carbon-Dioxide Control," Economics Working Papers wp11-07, School of Economics, University of Wollongong, NSW, Australia.

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