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An investigation of the e ects of carbon tari s in a two-sector gravity model
| Content Provider | Semantic Scholar |
|---|---|
| Author | Larch, Mario Wanner, Joschka |
| Copyright Year | 2013 |
| Abstract | International climate policy is far from an agreement on e ective joint measures to reduce carbon emissions. The resulting di erences of national carbon prices can lead to carbon leakage, i.e. to the shifting of carbon emissions between countries via trade ows, which undermines the e ectiveness of unilateral climate policies. One possible measure to tackle carbon leakage is the introduction of carbon tari s. We analyze the e ects of carbon tari s on carbon emissions, welfare and trade ows in a structural gravity framework. To this end, we develop a two-sector, two-factor gravity model, including a clean and a dirty sector, as well as carbon emissions as one of the two input factors. Besides other counterfactual scenarios, the developed model structure permits an exante evaluation of the introduction of carbon tari s. The results found for such a scenario are remarkable. Firstly, welfare (in terms of real income) is reduced in most countries, but the e ect tends to be more pronounced in poorer countries with dirtier methods of production. Secondly, carbon emissions are massively shifted from these countries to richer countries with cleaner production techniques. Thirdly and most remarkably, world carbon emissions increase by 0.5 % in the investigated counterfactual scenario. JEL-Codes : F14, F18, Q56. |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | http://www.etsg.org/ETSG2013/Papers/153.pdf |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
