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Energy tariffs in a small open economy

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  • Thompson, Henry

Abstract

Tariffs on imported energy alter production and redistribute income. The present paper examines a small open economy producing two traded goods with capital, labor, and imported energy. A tariff reduces import and domestic factor income but payment to one domestic factor rises. Energy intensive output falls but the other output may rise in the general equilibrium. Political opinions on the tariff would differ. Revenue is concave in the tariff suggesting that the government might set the tariff to maximize revenue. A simulation illustrates these general equilibrium properties across a range of tariffs.

Suggested Citation

  • Thompson, Henry, 2014. "Energy tariffs in a small open economy," Energy Economics, Elsevier, vol. 44(C), pages 63-67.
  • Handle: RePEc:eee:eneeco:v:44:y:2014:i:c:p:63-67
    DOI: 10.1016/j.eneco.2014.03.026
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    References listed on IDEAS

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    Cited by:

    1. Yoshiaki Nakada, 2017. "The energy price - commodity output relationship and the commodity price - commodity output relationship in a three-factor, two-good general equilibrium trade model with imported energy," Papers 1711.10096, arXiv.org.

    More about this item

    Keywords

    Energy tariffs; Tariff revenue; General equilibrium;

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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