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General equilibrium effects of environmental policy: A CGE-modeling approach

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  • Lars Bergman

Abstract

Estimation of emission control cost functions is often carried out in a partial equilibrium framework, i.e., under the assumption that emission control measures have negligible effects on input and output prices. In this paper a computable general equilibrium model is used for simulation of the impact on factor prices and resource allocation of reductions of SO infx sup- , NO infx su- and CO 2 -emissions. Thus the model includes markets for tradable emission permits, and the equilibrium prices of permits reflect the marginal costs of emission control. The results suggest that major emission reductions are likely to have general equilibrium effects, and thus that emission control cost functions that fail to take these effects into account may give a distorted picture of the economic impact of emission control. Copyright Kluwer Academic Publishers 1991

Suggested Citation

  • Lars Bergman, 1991. "General equilibrium effects of environmental policy: A CGE-modeling approach," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 1(1), pages 43-61, March.
  • Handle: RePEc:kap:enreec:v:1:y:1991:i:1:p:43-61
    DOI: 10.1007/BF00305950
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    References listed on IDEAS

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    1. Haaland, Jan I, et al, 1987. " VEMOD: A Ricardo-Heckscher-Ohlin-Jones Model of World Trade," Scandinavian Journal of Economics, Wiley Blackwell, vol. 89(3), pages 251-270.
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    Cited by:

    1. Nilsson, Charlotte, 1999. "A Unilateral Versus a Multilateral Carbon Dioxide Tax - A Numerical Analysis with the European Model GEM-E3," Working Papers 66, National Institute of Economic Research.
    2. Shinichi Muto & Hisa Morisugi & Taka Ueda, 2003. "Measuring Market Damage of Automobile Related Carbon Tax by Dynamic Computable General Equilibrium model," ERSA conference papers ersa03p257, European Regional Science Association.
    3. C. Rendleman & Kenneth Reinert & James Tobey, 1995. "Market-based systems for reducing chemical use in agriculture in the United States," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 5(1), pages 51-70, January.
    4. K. Farmer & K.W. Steininger, 1999. "Reducing CO2-Emissions Under Fiscal Retrenchment: A Multi-Cohort CGE-Model for Austria," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 13(3), pages 309-340, April.
    5. Roy Boyd & Kerry Krutilla, 1992. "Controlling acid deposition: A general equilibrium assessment," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 2(3), pages 307-322, May.

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