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Emission Taxes and Border Tax Adjustments for Oligopolistic Industries

Listed author(s):
  • Morihiro Yomogida
  • Nori Tarui

We examine the welfare consequence of emissions tax with and without a Border Tax Adjustment for an imperfectly competitive industry, where intra-industry trade arises between countries. BTA allows a government to impose a pollution-content tariff on imports and refund an emission tax for export sales. We analyze the structure of an optimal emission tax with BTA when a government chooses its emission tax rate to maximize its national welfare. We show that the optimal emission tax policy with BTA achieves greater national welfare and higher environmental quality than the optimal policy without BTA.

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File URL: http://hdl.handle.net/10.1111/1468-0106.12045
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Article provided by Wiley Blackwell in its journal Pacific Economic Review.

Volume (Year): 18 (2013)
Issue (Month): 5 (December)
Pages: 644-673

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Handle: RePEc:bla:pacecr:v:18:y:2013:i:5:p:644-673
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  1. Brander, James & Krugman, Paul, 1983. "A 'reciprocal dumping' model of international trade," Journal of International Economics, Elsevier, vol. 15(3-4), pages 313-321, November.
  2. Lai, Yu-Bong & Hu, Chia-Hsien, 2008. "Trade agreements, domestic environmental regulation, and transboundary pollution," Resource and Energy Economics, Elsevier, vol. 30(2), pages 209-228, May.
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  5. Boehringer Christoph & Fischer Carolyn & Rosendahl Knut Einar, 2010. "The Global Effects of Subglobal Climate Policies," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(2), pages 1-35, December.
  6. Meredith L. Fowlie, 2009. "Incomplete Environmental Regulation, Imperfect Competition, and Emissions Leakage," American Economic Journal: Economic Policy, American Economic Association, vol. 1(2), pages 72-112, August.
  7. Dieter Helm & Cameron Hepburn & Giovanni Ruta, 2012. "Trade, climate change, and the political game theory of border carbon adjustments," Oxford Review of Economic Policy, Oxford University Press, vol. 28(2), pages 368-394, SUMMER.
  8. Gregory C. Chow, 2011. "Economic Analysis And Policies For Environmental Problems," Pacific Economic Review, Wiley Blackwell, vol. 16(3), pages 339-348, 08.
  9. 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.
  10. Babiker, Mustafa H., 2005. "Climate change policy, market structure, and carbon leakage," Journal of International Economics, Elsevier, vol. 65(2), pages 421-445, March.
  11. Gary Clyde Hufbauer & Steve Charnovitz & Jisun Kim, 2009. "Global Warming and the World Trading System," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 4280, November.
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