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Is Environmental Tax Harmonization Desirable in Global Value Chains?

Author

Listed:
  • Haitao Cheng

    (Graduate School of Economics, Hitotsubashi University,)

  • Hayato Kato

    (Graduate School of Economics, Osaka University)

  • Ayako Obashi

    (School of International Politics, Economics and Communication, Aoyama Gakuin University)

Abstract

The spatialunbundlingofpartsproductionandassemblycurrentlycharacterizes globalization, leadingtotheworldwidedispersionofpollution.Weconsidersociallyop- timal (cooperative)environmentaltaxesinatwo-countrymodelofglobalvaluechains in whichthelocationofbothpartsandassemblycandi er.Whenunbundlingcosts are sohighthatpartsandassemblymustcolocateinthepre-globalizedworld,pollu- tion isspatiallyconcentrated,andharmonizingenvironmentaltaxesmaximizesglobal welfare.Incontrast,withlowunbundlingcoststriggeringthedispersionofpartsand thuspollutionthroughouttheworldastoday,harmonizationfailstomaximizeglobal welfare.Similarresultsholdwhenthetwocountriesnon-cooperativelychoosetheir environmentaltaxes.

Suggested Citation

  • Haitao Cheng & Hayato Kato & Ayako Obashi, 2020. "Is Environmental Tax Harmonization Desirable in Global Value Chains?," Discussion Papers in Economics and Business 19-13-Rev., Osaka University, Graduate School of Economics.
    • Handle: RePEc:osk:wpaper:1913r
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    Cited by:

    1. Saussay, Aurélien & Zugravu-Soilita, Natalia, 2023. "International production chains and the pollution offshoring hypothesis: An empirical investigation," Resource and Energy Economics, Elsevier, vol. 73(C).
    2. Cheng, Haitao, 2021. "Trade, Consumption Pollution and Tax," Discussion paper series HIAS-E-106, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    3. Cheng, Haitao, 2021. "Border carbon adjustments with endogenous assembly locations," Economic Modelling, Elsevier, vol. 105(C).
    4. Haitao Cheng, 2023. "Consumption pollution and taxes with endogenous firm locations and different market sizes," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 30(6), pages 1601-1632, December.
    5. Delgado, Francisco J. & Freire-González, Jaume & Presno, Maria J., 2022. "Environmental taxation in the European Union: Are there common trends?," Economic Analysis and Policy, Elsevier, vol. 73(C), pages 670-682.
    6. Manta, Alina Georgiana & Doran, Nicoleta Mihaela & Bădîrcea, Roxana Maria & Badareu, Gabriela & Țăran, Alexandra Mădălina, 2023. "Does the implementation of a Pigouvian tax be considered an effective approach to address climate change mitigation?," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 1719-1731.

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    More about this item

    Keywords

    Environmentalpolicy; Fragmentation; Emissiontaxcompetition; International coordination; Tradeinpartsandcomponents;
    All these keywords.

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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