IDEAS home Printed from https://ideas.repec.org/p/bon/boncrc/crctr224_2023_483.html
   My bibliography  Save this paper

Who Pays for the Pollution Fees? Cost Transmissions Along the Supply Chain

Author

Listed:
  • Ying Li
  • Lei Li
  • Zhi Su
  • Libo Yin

Abstract

This paper studies the propagation of environmental regulation along the supply chain and quantifies its welfare implications. By incorporating input-output linkages into the workhorse tax incidence model, we derive statistically sufficient representations of the incidence under a general imperfect competition framework. In the context of China’s SO2 emission regulation, we show that emission fees affect manufacturing producers through two channels. First, manufacturing producers bear the full brunt of emissions fees imposed directly on them. Second, emission fees imposed on their upstream suppliers translate into higher input costs faced by manufacturing producers, who bear 29% of the burden. Neglecting the role of the latter would result in an underestimation of 5%–13% of the cost burden for most industries.

Suggested Citation

  • Ying Li & Lei Li & Zhi Su & Libo Yin, 2023. "Who Pays for the Pollution Fees? Cost Transmissions Along the Supply Chain," CRC TR 224 Discussion Paper Series crctr224_2023_483, University of Bonn and University of Mannheim, Germany.
    • Handle: RePEc:bon:boncrc:crctr224_2023_483
    as

    Download full text from publisher

    File URL: https://www.crctr224.de/research/discussion-papers/archive/dp483
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Input-Output-Linkage; Emission Fees; Incidence; Pass-Through;
    All these keywords.

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bon:boncrc:crctr224_2023_483. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CRC Office (email available below). General contact details of provider: https://www.crctr224.de .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.