IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Climate policy and border tax adjustments: Might industrial organization matter?

  • Ian Sheldon

    ()

    (Ohio State University)

  • Steve McCorriston

    (University of Exeter)

Registered author(s):

    In this paper, analysis is presented relating to the impact of border tax adjustments for climate policy on the problem of carbon leakage, and the related issue of competitiveness of energy-intensive industries. Compared to the current literature, these policies are set in the context of a vertically-related market characterized by successive oligopoly. Specifically, it is shown that an appropriate border tax adjustment depends on the incidence of domestic climate policy, the nature of competition in upstream and downstream sectors, as well as the basis for assessing the trade neutrality of any border tax adjustment. If trade neutrality is defined in terms of market volume, even though carbon leakage is reduced, domestic firm competitiveness cannot be maintained. This compares to defining trade neutrality in terms of market share, which results in domestic competitiveness being maintained and global carbon emissions being reduced. In either case, consumers incur deadweight losses.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://econoquantum.cucea.udg.mx/wp-content/uploads/2013/02/art.-1-Vo.-9-N%C3%BAm.-2-Ian-Sheldon.pdf
    Download Restriction: no

    File URL: http://econoquantum.cucea.udg.mx/?page_id=1057
    Download Restriction: no

    Article provided by Universidad de Guadalajara, Centro Universitario de Ciencias Economico Administrativas, Departamento de Metodos Cuantitativos y Maestria en Economia. in its journal EconoQuantum, Revista de Economia y Negocios.

    Volume (Year): 9 (2012)
    Issue (Month): 2 (Julio-Diciembre)
    Pages: 7-28

    as
    in new window

    Handle: RePEc:qua:journl:v:9:y:2012:i:2:p:7-28
    Contact details of provider: Postal: 636 6270
    Phone: 636 6270
    Fax: 633 6975
    Web page: http://econoquantum.cucea.udg.mx

    More information through EDIRC

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as in new window
    1. Mei, Bin & Sun, Changyou, 2008. "Assessing Time-Varying Oligopoly and Oligopsony Power in the U.S. Paper Industry," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 40(03), December.
    2. Carraro, Carlo & Siniscalco, Domenico, 1993. "Strategies for the international protection of the environment," Journal of Public Economics, Elsevier, vol. 52(3), pages 309-328, October.
    3. Green, Richard J, 1996. "Increasing Competition in the British Electricity Spot Market," Journal of Industrial Economics, Wiley Blackwell, vol. 44(2), pages 205-16, June.
    4. Kennedy Peter W., 1994. "Equilibrium Pollution Taxes in Open Economies with Imperfect Competition," Journal of Environmental Economics and Management, Elsevier, vol. 27(1), pages 49-63, July.
    5. Hoel, M., 1993. "Efficient Climate Policy in the Presence of Free Riders," Memorandum 04/1993, Oslo University, Department of Economics.
    6. Abiru, Masahiro, 1988. "Vertical Integration, Variable Proportions and Successive Oligopolies," Journal of Industrial Economics, Wiley Blackwell, vol. 36(3), pages 315-25, March.
    7. Monjon, Stéphanie & Quirion, Philippe, 2010. "How to design a border adjustment for the European Union Emissions Trading System ?," Economics Papers from University Paris Dauphine 123456789/7348, Paris Dauphine University.
    8. Messerlin, Patrick A., 2012. "Climate and trade policies: from mutual destruction to mutual support," World Trade Review, Cambridge University Press, vol. 11(01), pages 53-80, January.
    9. Craig Gallet, 1996. "Mergers and market power in the US steel industry," Applied Economics Letters, Taylor & Francis Journals, vol. 3(4), pages 221-223.
    10. Mattoo, Aaditya & Subramanian, Arvind & van der Mensbrugghe, Dominique & He, Jianwu, 2009. "Reconciling climate change and trade policy," Policy Research Working Paper Series 5123, The World Bank.
    11. Trevor Houser & Rob Bradley & Britt Childs, 2008. "Leveling the Carbon Playing Field: International Competition and US Climate Policy Design," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 4204, March.
    12. Ben Lockwood & David Meza & Gareth Myles, 1994. "When are origin and destination regimes equivalent?," International Tax and Public Finance, Springer, vol. 1(1), pages 5-24, February.
    13. Brian R. Copeland & M. Scott Taylor, 2004. "Trade, Growth, and the Environment," Journal of Economic Literature, American Economic Association, vol. 42(1), pages 7-71, March.
    14. Sleuwaegen, Leo & Belderbos, Rene & Jie-A-Joen, Clive, 1998. "Cascading contingent protection and vertical market structure," International Journal of Industrial Organization, Elsevier, vol. 16(6), pages 697-718, November.
    15. Messerlin, Patrick A., 2010. "Climate change and trade policy : from mutual destruction to mutual support," Policy Research Working Paper Series 5378, The World Bank.
    16. Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 488-511, June.
    17. Barrett, Scott, 1994. "Self-Enforcing International Environmental Agreements," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 878-94, Supplemen.
    18. Steve Mccorriston & Ian Sheldon, 2005. "Export Competition and the Remission of Domestic Environmental Taxes," International Tax and Public Finance, Springer, vol. 12(5), pages 627-637, September.
    19. STEVE M cCORRISTON & IAN M. SHELDON, 2005. "Market Access and WTO Border Tax Adjustments for Environmental Excise Taxes under Imperfect Competition," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 7(4), pages 579-592, October.
    20. Markusen, James R., 1975. "International externalities and optimal tax structures," Journal of International Economics, Elsevier, vol. 5(1), pages 15-29, February.
    21. Borenstein, Severin & Bushnell, James, 1999. "An Empirical Analysis of the Potential for Market Power in California's Electricity Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 47(3), pages 285-323, September.
    22. Ventosa, Mariano & Baillo, Alvaro & Ramos, Andres & Rivier, Michel, 2005. "Electricity market modeling trends," Energy Policy, Elsevier, vol. 33(7), pages 897-913, May.
    23. Denicolo, Vincenzo & Garella, Paolo G, 1999. "Market-Share Import Restraints in Oligopoly," Review of International Economics, Wiley Blackwell, vol. 7(4), pages 732-43, November.
    24. Ben Lockwood & John Whalley, 2010. "Carbon-motivated Border Tax Adjustments: Old Wine in Green Bottles?," The World Economy, Wiley Blackwell, vol. 33(6), pages 810-819, 06.
    25. Frankel, Jeffrey, 2009. "Environmental Effects of International Trade," Working Paper Series rwp09-006, Harvard University, John F. Kennedy School of Government.
    26. Green, Richard J & Newbery, David M, 1992. "Competition in the British Electricity Spot Market," Journal of Political Economy, University of Chicago Press, vol. 100(5), pages 929-53, October.
    27. Stavins, Robert, 2000. "Experience with Market-Based Environmental Policy Instruments," Working Paper Series rwp00-004, Harvard University, John F. Kennedy School of Government.
    28. Dermot Leahy & J. Peter Neary, 2001. "Robust rules for industrial policy open economies," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 10(4), pages 393-409.
    29. Bolle, Friedel, 1992. "Supply function equilibria and the danger of tacit collusion : The case of spot markets for electricity," Energy Economics, Elsevier, vol. 14(2), pages 94-102, April.
    30. Dermot Leahy & J. Peter Neary, 2000. "Robust Rules for Industrial Policy in open Economies," Working Papers 200021, School Of Economics, University College Dublin.
    31. John Pezzey, 1992. "Analysis of Unilateral CO2 Control in the European Community and OECD," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 159-172.
    32. Ottar MÆstad, 1998. "On the Efficiency of Green Trade Policy," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 11(1), pages 1-18, January.
    33. Ishikawa, Jota & Spencer, Barbara J., 1999. "Rent-shifting export subsidies with an imported intermediate product," Journal of International Economics, Elsevier, vol. 48(2), pages 199-232, August.
    34. Robert A. Ritz, 2009. "Carbon leakage under incomplete environmental regulation: An industry-level approach," Economics Series Working Papers 461, University of Oxford, Department of Economics.
    35. Conrad Klaus, 1993. "Taxes and Subsidies for Pollution-Intensive Industries as Trade Policy," Journal of Environmental Economics and Management, Elsevier, vol. 25(2), pages 121-135, September.
    36. Michael Hoel, 1992. "International environment conventions: The case of uniform reductions of emissions," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 2(2), pages 141-159, March.
    37. James Poterba & Julio Rotemberg, 1995. "Environmental taxes on intermediate and final goods when both can be imported," International Tax and Public Finance, Springer, vol. 2(2), pages 221-228, August.
    38. Salinger, Michael A, 1988. "Vertical Mergers and Market Foreclosure," The Quarterly Journal of Economics, MIT Press, vol. 103(2), pages 345-56, May.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:qua:journl:v:9:y:2012:i:2:p:7-28. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sandra Ivett Portugal Padilla)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.