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A CGE analysis of a rate-based policy for climate change mitigation

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  • Kato, Shinya
  • Takeuchi, Kenji

Abstract

We conducted a computable general equilibrium analysis of a policy to regulate carbon dioxide emissions per unit of production in Japan. It is often claimed that regulations based on emission rates might lead to an increase in carbon dioxide emissions but would not suppress economic growth. This study shows that in the short run, a rate-based policy does not lead to an increase in emissions. We also compared a rate-based policy with a cap-and-trade policy and found that the former leads to a greater reduction in the real GDP than the latter. Furthermore, the change in output tends to be more evenly distributed under a rate-based policy than under with a cap-and-trade policy, although the former is inferior in terms of cost-effectiveness.

Suggested Citation

  • Kato, Shinya & Takeuchi, Kenji, 2017. "A CGE analysis of a rate-based policy for climate change mitigation," Journal of the Japanese and International Economies, Elsevier, vol. 43(C), pages 88-95.
  • Handle: RePEc:eee:jjieco:v:43:y:2017:i:c:p:88-95
    DOI: 10.1016/j.jjie.2017.01.002
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    Cited by:

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    More about this item

    Keywords

    Emissions tradind; Rate-based; Cap-and-trade; Japan; Computable general equilibrium analysis;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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