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Should Households and Businesses Receive Compensation for the Costs of Greenhouse Gas Emissions?

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  • John Freebairn

Abstract

Arguments for, and then the form and level of, compensation of households and businesses for the additional costs of an emissions trading scheme to lower greenhouse gas (GHG) emissions are evaluated. With most of the costs passed forward to households as higher consumer prices, a sequential set of direct income transfers to all households is proposed to meet equity and macroeconomic stability objectives. In the event that Australia proceeds with a scheme before some of the other global polluters, to avoid carbon leakage and unnecessary industrial restructuring a consumption base system of taxing the GHG component of imports and compensating the GHG component of exports is proposed.

Suggested Citation

  • John Freebairn, 2009. "Should Households and Businesses Receive Compensation for the Costs of Greenhouse Gas Emissions?," Department of Economics - Working Papers Series 1071, The University of Melbourne.
  • Handle: RePEc:mlb:wpaper:1071
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    File URL: http://fbe.unimelb.edu.au/__data/assets/pdf_file/0008/801089/1071.pdf
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    References listed on IDEAS

    as
    1. Paul Simshauser & Thao Doan, 2009. "Emissions Trading, Wealth Transfers and the Wounded Bull Scenario in Power Generation," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 42(1), pages 64-83, March.
    2. Yew-Kwang Ng, 1987. "Equity, Efficiency and Financial Viability: Public-Utility Pricing with Special Reference to Water Supply," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 20(3), pages 21-35.
    3. Dixon, Peter B. & Rimmer, Maureen T., 2000. "The Government/Democrats' package of changes in indirect taxes," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 44(1), March.
    4. Jos Sijm & Karsten Neuhoff & Yihsu Chen, 2006. "CO 2 cost pass-through and windfall profits in the power sector," Climate Policy, Taylor & Francis Journals, vol. 6(1), pages 49-72, January.
    5. Antonia Cornwell & John Creedy, 1996. "Carbon taxation, prices and inequality in Australia," Fiscal Studies, Institute for Fiscal Studies, vol. 17(3), pages 21-38, August.
    6. Pedro Linares & Francisco Javier Santos & Mariano Ventosa & Luis Lapiedra, 2006. "Impacts of the European Emissions Trading Scheme Directive and Permit Assignment Methods on the Spanish Electricity Sector," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 79-98.
    7. Freebairn, John W., 2008. "Some Distributional Issues in Greenhouse Gas Policy Design," 2008 Conference (52nd), February 5-8, 2008, Canberra, Australia 6770, Australian Agricultural and Resource Economics Society.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Macroeconomics: Consumption; Saving; Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance;

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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