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Optimally differentiated carbon prices for unilateral climate policy

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  • Boeters, Stefan

Abstract

Economic thought on climate policy as an instance of environmental regulation is strongly influenced by the principle of a uniform carbon price. Economists acknowledge that this principle breaks down in a “second-best” world with other distortions, such as taxes and market power in domestic and international markets. However, systematic analysis of this point in the economic climate policy literature is scarce. In the present paper, a computable general equilibrium (CGE) set-up is chosen in order to examine what pattern of differentiated carbon prices emerges as optimal in a second-best world.

Suggested Citation

  • Boeters, Stefan, 2014. "Optimally differentiated carbon prices for unilateral climate policy," Energy Economics, Elsevier, vol. 45(C), pages 304-312.
  • Handle: RePEc:eee:eneeco:v:45:y:2014:i:c:p:304-312
    DOI: 10.1016/j.eneco.2014.07.015
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    References listed on IDEAS

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    1. Christoph Böhringer & Victoria Alexeeva-Talebi, 2013. "Unilateral Climate Policy and Competitiveness: Economic Implications of Differential Emission Pricing," The World Economy, Wiley Blackwell, vol. 36(2), pages 121-154, February.
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    7. Hoel, Michael, 1996. "Should a carbon tax be differentiated across sectors?," Journal of Public Economics, Elsevier, vol. 59(1), pages 17-32, January.
    8. Arjan Lejour & Paul Veenendaal & Gerard Verweij & Nico van Leeuwen, 2006. "Worldscan; a model for international economic policy analysis," CPB Document 111, CPB Netherlands Bureau for Economic Policy Analysis.
    9. A. Bovenberg, 1999. "Green Tax Reforms and the Double Dividend: an Updated Reader's Guide," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 6(3), pages 421-443, August.
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    Cited by:

    1. Jan Abrell & Sebastian Rausch & Giacomo A. Schwarz, 2016. "Social Equity Concerns and Differentiated Environmental Taxes," CER-ETH Economics working paper series 16/262, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    2. repec:eee:appene:v:211:y:2018:i:c:p:1039-1049 is not listed on IDEAS
    3. repec:kap:enreec:v:70:y:2018:i:2:d:10.1007_s10640-017-0130-y is not listed on IDEAS
    4. Chiu, Fan-Ping & Kuo, Hsiao-I. & Chen, Chi-Chung & Hsu, Chia-Sheng, 2015. "The energy price equivalence of carbon taxes and emissions trading—Theory and evidence," Applied Energy, Elsevier, vol. 160(C), pages 164-171.

    More about this item

    Keywords

    Climate policy; Uniform carbon price; Carbon price differentiation; Optimal taxation; Computable general equilibrium model;

    JEL classification:

    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

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