Carbon tax based on the emission factor: a bilevel programming approach
We present a bilevel programming approach to design an effective carbon tax scheme based on the production emission factor, used as an intensity measure, for a competitive market with multiple players. At the upper level, the government sets a target emission factor for the industry and taxes firms if they exceed that target. At the lower level, the industry sets output levels that maximize social welfare. The bilevel model is transformed to a linear MIP by replacing the lower level optimization problem by its KKT conditions, and linearizing the complementarity slackness conditions. We test the model in the context of the cement industry. The results show that the proposed model finds the optimal tax rate that induces firms to switch to less carbon-intensive fuels and reduces the overall emissions. Copyright Springer Science+Business Media New York 2014
Volume (Year): 58 (2014)
Issue (Month): 4 (April)
|Contact details of provider:|| Web page: http://www.springer.com|
|Order Information:||Web: http://www.springer.com/business/operations+research/journal/10898|
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.:
- Marschinski, Robert & Edenhofer, Ottmar, 2010. "Revisiting the case for intensity targets: Better incentives and less uncertainty for developing countries," Energy Policy, Elsevier, vol. 38(9), pages 5048-5058, September.
- Martin L. Weitzman, 1974.
"Prices vs. Quantities,"
Review of Economic Studies,
Oxford University Press, vol. 41(4), pages 477-491.
- M. L. Weitzman, 1973. "Prices vs. Quantities," Working papers 106, Massachusetts Institute of Technology (MIT), Department of Economics.
- Springer, Urs, 2003. "The market for tradable GHG permits under the Kyoto Protocol: a survey of model studies," Energy Economics, Elsevier, vol. 25(5), pages 527-551, September.
- Fischer, Carolyn & Springborn, Michael, 2011. "Emissions targets and the real business cycle: Intensity targets versus caps or taxes," Journal of Environmental Economics and Management, Elsevier, vol. 62(3), pages 352-366.
- Fischer, Carolyn & Springborn, Michael R., 2009. "Emissions Targets and the Real Business Cycle: Intensity Targets versus Caps or Taxes," Discussion Papers dp-09-47, Resources For the Future.
- Fischer, Carolyn & Springborn, Michael R., 2011. "Emissions Targets and the Real Business Cycle: Intensity Targets versus Caps or Taxes," Discussion Papers dp-09-47-rev, Resources For the Future.
- Newell, Richard G. & Pizer, William A., 2008. "Indexed regulation," Journal of Environmental Economics and Management, Elsevier, vol. 56(3), pages 221-233, November.
- Newell, Richard G. & Pizer, William A., 2006. "Indexed Regulation," Discussion Papers dp-06-32, Resources For the Future.
- Richard G. Newell & William A. Pizer, 2008. "Indexed Regulation," NBER Working Papers 13991, National Bureau of Economic Research, Inc.
- Frank Jotzo & John Pezzey, 2007. "Optimal intensity targets for greenhouse gas emissions trading under uncertainty," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 38(2), pages 259-284, October.
- Frank Jotzo & John C. V. Pezzey, 2007. "Optimal Intensity Targets for Greenhouse Gas Emissions Trading Under Uncertainty," Economics and Environment Network Working Papers 0701, Australian National University, Economics and Environment Network.
- Carolyn Fischer, 2003. "Combining rate-based and cap-and-trade emissions policies," Climate Policy, Taylor & Francis Journals, vol. 3(sup2), pages 89-103, December.
- Fischer, Carolyn, 2003. "Combining Rate-Based and Cap-and-Trade Emissions Policies," Discussion Papers dp-03-32, Resources For the Future.
- D. Dudek & A. Golub, 2003. ""Intensity" targets: pathway or roadblock to preventing climate change while enhancing economic growth?," Climate Policy, Taylor & Francis Journals, vol. 3(sup2), pages 21-28, December.
- Pizer, William, 2005. "The Case for Intensity Targets," Discussion Papers dp-05-02, Resources For the Future.
- Quirion, Philippe, 2005. "Does uncertainty justify intensity emission caps?," Resource and Energy Economics, Elsevier, vol. 27(4), pages 343-353, November.
- Philippe Quirion, 2005. "Does uncertainty justify intensity emission caps?," Post-Print halshs-00007162, HAL.
- Nic Rivers & Mark Jaccard, 2010. "Intensity-Based Climate Change Policies in Canada," Canadian Public Policy, University of Toronto Press, vol. 36(4), pages 409-428, December.
- Pizer, William A., 2002. "Combining price and quantity controls to mitigate global climate change," Journal of Public Economics, Elsevier, vol. 85(3), pages 409-434, September.
- Kuik, Onno & Mulder, Machiel, 2004. "Emissions trading and competitiveness: pros and cons of relative and absolute schemes," Energy Policy, Elsevier, vol. 32(6), pages 737-745, April.
- Zhou, Ying & Wang, Lizhi & McCalley, James D., 2011. "Designing effective and efficient incentive policies for renewable energy in generation expansion planning," Applied Energy, Elsevier, vol. 88(6), pages 2201-2209, June. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:spr:jglopt:v:58:y:2014:i:4:p:795-815. 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: (Sonal Shukla)or (Rebekah McClure)
If references are entirely missing, you can add them using this form.