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The Role of Trade and Competitiveness Measures in US Climate Policy

  • Carolyn Fischer
  • Alan K. Fox

We review the proposed measures for addressing competitiveness and carbon leakage concerns in recent US climate policy legislation. For eligible energy-intensive, trade-exposed sectors, output-based rebates would initially dampen cost increases; later, border adjustments would ensure that imports face comparable cost burdens. Both measures can in theory enhance the economic efficiency of carbon reduction efforts, but both pose some interesting economic and practical trade-offs. This paper discusses our recent research into the welfare and carbon leakage effects of using output-based allocation and trade measures in conjunction with climate policies.

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.258
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Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 101 (2011)
Issue (Month): 3 (May)
Pages: 258-62

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Handle: RePEc:aea:aecrev:v:101:y:2011:i:3:p:258-62
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  1. Fischer, Carolyn & Fox, Alan K., 2009. "Comparing Policies to Combat Emissions Leakage: Border Tax Adjustments versus Rebates," Discussion Papers dp-09-02, Resources For the Future.
  2. Bernard, Alain L. & Fischer, Carolyn & Fox, Alan K., 2007. "Is there a rationale for output-based rebating of environmental levies?," Resource and Energy Economics, Elsevier, vol. 29(2), pages 83-101, May.
  3. Fischer, Carolyn, 2011. "Market power and output-based refunding of environmental policy revenues," Resource and Energy Economics, Elsevier, vol. 33(1), pages 212-230, January.
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