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Carbon tax and tourism consumption

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  • Doan, Nguyen
  • Nguyen, Canh Phuc

Abstract

This study explores the impact on tourism consumption of implementing a carbon tax. Employing a difference-in-differences model for a sample of 117 countries from 1995 to 2019, we find that a carbon tax has a significant negative effect on domestic tourism spending but a weak positive effect on outbound tourism spending. On average, implementing a carbon tax decreases domestic tourism spending by 12 %. In contrast, such an environmental policy increases outbound tourism. Interestingly, when considering the intermediary channels of income and price level, the mechanism analysis shows suggestive evidence that implementing a carbon tax increases the price level, which is then transmitted to decreased domestic tourism consumption but does not affect outbound tourism.

Suggested Citation

  • Doan, Nguyen & Nguyen, Canh Phuc, 2025. "Carbon tax and tourism consumption," Annals of Tourism Research, Elsevier, vol. 113(C).
    • Handle: RePEc:eee:anture:v:113:y:2025:i:c:s0160738325000805
    DOI: 10.1016/j.annals.2025.103974
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    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Z38 - Other Special Topics - - Tourism Economics - - - Policy

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