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Can a Small Nation Gain? From Introducing a Carbon Tac Early


  • Lund, D.


Carbon dioxide emissions may cause global warming. But own emissions have negligible effects for a small nation, which may thus regard carbon taxes as distortionary. Such taxes may have other effects, however. When research and development (R&D) has positive external effects, carbon taxes may correct for some of these, by giving incentives for R&D in particular directions. This may be beneficial when the nation faces a binding international agreement on reducing emissions in a future period. This effect is analysed, both for a case with a carbon tax alone, and for two different cases with R&D subsidies as well. Finally, a different international agreement is considered, under which the tax revenue is collected domestically.
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Suggested Citation

  • Lund, D., 1993. "Can a Small Nation Gain? From Introducing a Carbon Tac Early," Memorandum 15/1993, Oslo University, Department of Economics.
  • Handle: RePEc:hhs:osloec:1993_015

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    air pollution ; taxes ; research and development;

    JEL classification:

    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development


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