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Carbon Tariffs Revisited

Author

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  • Christoph Böhringer

    () (University of Oldenburg - Economic Policy & ZenTra)

  • Andre Müller

    () (Ecoplan)

  • Jan Schneider

    () (University of Oldenburg - Economic Policy)

Abstract

Concerns about adverse impacts on domestic energy-intensive and trade-exposed (EITE) industries are at the fore of the political debate about unilateral climate policies. Tariffs on the carbon embod-ied in imported goods from countries without emission pricing appeal as a measure to reduce carbon leakage and protect domestic EITE industries. We show that the introduction of carbon tariffs can do more harm than good to domestic EITE industries. Two determinants drive the sign and magnitude of EITE impacts. Firstly, the composition of embodied emissions in goods: if a large share of embodied carbon is imported in intermediate inputs, industries might suffer from carbon tariffs. Secondly, the share of domestic output that is supplied to the export market: while carbon tariffs level the playing field on domestic markets, they increase the cost-disadvantage vis-à-vis competitors from abroad in foreign markets.

Suggested Citation

  • Christoph Böhringer & Andre Müller & Jan Schneider, 2014. "Carbon Tariffs Revisited," ZenTra Working Papers in Transnational Studies 33 / 2014, ZenTra - Center for Transnational Studies, revised Feb 2014.
  • Handle: RePEc:zen:wpaper:33
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    References listed on IDEAS

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    Cited by:

    1. repec:cup:endeec:v:22:y:2017:i:06:p:725-746_00 is not listed on IDEAS
    2. Zhang, Zengkai & Zhang, Zhongxiang, 2017. "Intermediate input linkage and carbon leakage," Environment and Development Economics, Cambridge University Press, vol. 22(06), pages 725-746, December.
    3. Larch, Mario & Wanner, Joschka, 2017. "Carbon tariffs: An analysis of the trade, welfare, and emission effects," Journal of International Economics, Elsevier, vol. 109(C), pages 195-213.

    More about this item

    Keywords

    carbon tariffs; unilateral climate policy; multi-region input-output analysis; CGE;

    JEL classification:

    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

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