should a carbon tax be differentiated across sectors abstract if some but not all countries are cooperating to reduce co2 emissions one could make the following argument a high carbon tax for carbon intensive tradeable sectors in the cooperating countries will reduce the production of goods from these sectors and therefore co2 emissions in the cooperating countries however this will to a large extent be counteracted by increased production of such goods in the countries that have no climate policy and since it is only total co2 emissions from all countries that are relevant for the climate there is no point in a policy that simply relocates co2 emissions from the cooperating countries to the countries that have no climate policy according to this line of reasoning carbon intensive tradeable sectors should thus face a lower carbon tax than other sectors of the economy this paper shows that a carbon tax should not be differentiated across sectors in the economy provided one can use import and export tariffs on all traded goods it is also shown that such a differentiation of carbon taxes is optimal for the cooperating countries if they are prevented from using tariffs on the traded goods however informational or political factors constraining the use of tariffs are likely also to constrain the possibility of differentiating carbon taxes between sectors

making sense of the competitiveness debate the debate over national competitiveness is marked by some basic misperceptions with few exceptions those who use the term have a crude essentially mercantilist view of world trade in which competition among nations is just like competition between corporations not only do the authors and readers of reports on national competitiveness usually not understand comparative advantage they are unaware of the most basic adding up constraints economists however find it hard to believe that seemingly well informed people can really be this naive and assume that there must be more sophisticated ideas lying behind what they say the rationales offered by economists in turn offer false comfort to the would be sophisticates who like the term competitiveness they believe that they have transcended conventional economic theory when the fact is that they have failed to comprehend it in short the actual level of discussion is lower than any of the participants imagines copyright 1996 by oxford university press

the cross country implications of alternative climate policies abstract because of worldwide growing concerns about global climate change great interest has been expressed in the potential of alternative climate policies to reduce global carbon emissions in this paper we compare cross country implications of alternative climate policies including unilateral and multilateral climate policies our main findings are as follows firstly there are large differences in cross country effects of alternative unilateral climate policies when the same given carbon emission reductions are achieved in each abating country respectively meanwhile cross border externalities undermine efficiency of unilateral climate policies secondly there are significant differences in cross country implications of alternative multilateral climate policies when the same global emission reductions are allocated in several different ways among abating countries thirdly it is difficult to reach a stable global climate treaty since any abating country has the incentive to argue for small carbon emission reductions finally multilateral climate policies can reduce the negative impacts of cross border externalities but cannot cure all cross border externalities looking ahead it will be a great policy challenge for the world to reduce carbon emissions in a cost effective way

approximating infinite horizon models in a complementarity format a primer in dynamic general equilibrium analysis abstract we demonstrate the advantages of the complementarity formulation for approximating infinite horizon equilibria in neoclassical growth models as compared with techniques originally developed for optimal planning models the complementarity approach does not require an ex ante specification of the growth rate in the terminal period and is therefore suitable for models with endogenous growth or short time horizons we also consider approximation issues in models with multiple infinitely lived agents changes in net indebtedness over a finite period are estimated as part of the model to obtain a precise approximation of the infinite horizon equilibria with a small number of time periods

the effect of carbon tax on farm income comment olale et al environ resour econ 605 623 2019 argue that the introduction of a carbon tax substantially reduced farm income in the canadian province of british columbia in this comment we raise serious concerns with their data empirical methods and theory most importantly olale et al 2019 assume that the difference in farm income between british columbia and the rest of canada would have remained constant over time without the introduction of the carbon tax we provide evidence that this is unlikely to be true and show that their results disappear when we account for differential trends we conclude that the estimates in olale et al 2019 do not represent the effect of a carbon tax on farm income

european emission trading scheme and competitiveness a case study on the iron and steel industry abstract we quantify the impact of the european emission trading scheme ets on the two dimensions of competitiveness production and profitability for the iron and steel industry among those covered by the scheme this sector is one of the most exposed since it is both highly co 2 intensive and relatively open to international trade we also examine the robustness of these results to various assumptions marginal abatement cost curve trade and demand elasticities as well as pass through rates and updating of allocation rules of which the latter two are scarcely debated we conclude that for this sector competitiveness losses are small we prove this conclusion to be robust hence arguments against tightening the environmental stringency of the ets in phase ii are not justified on grounds of competitiveness loss our systematic sensitivity analysis allows us to identify the important assumptions for each output variable it turns out that pass through rates and updating rules are significant despite being often implicit and least debated in existing analyses

climate policy instruments and industry effects and potential responses in the swedish context efficient policy instruments for reducing the emission of greenhouse gases are essential for the realization of a successful climate policy general economic policy instruments have the potential for providing efficient emission reduction as they equalise marginal costs for emission reduction between different actors they also provide incentives for a great variety of responses such as energy efficiency improvements fuel substitution and reduced consumption of carbon intensive products however as a result of the fact that it has so far been impossible to implement policy instruments on a global scale these instruments are often adapted in such a way that some of their potential advantages are eliminated in this paper the possibility of different policy instruments to contribute to reductions in industrial co2 emissions while preserving the competitiveness of industry is evaluated theoretically the consequences of increasing the cost of co2 emission in various industrial sectors are also discussed attention is directed towards carbon taxes emission trading and regulation co2 taxes without tax reductions and emission trading with allocation through auctioning have theoretical advantages in a global climate regime but may lead to significant disadvantages if implemented in a single or a small groups of countries emission trading with free intensity based allocation would in this case have a major advantage in combining incentives for emission reductions through efficiency improvements and fuel substitution with little impact on production levels less

how large are the impacts of carbon motivated border tax adjustments on china and how to mitigate them shandong social science planning fund program 12djjj12 independent innovation foundation of shandong university iifsdu 2012gn038 ministry of education research of social sciences youth funded projects 13yjc790065 national natural science foundation of china 71203186 71173170 china postdoctoral science foundation 2013m530309 2012t50802

transboundary effects of environmental policy markets and emission leakages abstract one of many explanations for environmental kuznets curves for rich countries can be that dirty production is relocated to economies with laxer abatement regimes if this is caused by national abatement policies environmental stresses are transferred to other countries further the economic costs of national abatement policies can be shared with foreigners to some extent both through a lower demand for imports and losses of market shares for foreign competitors that produce cleaner products we quantify effects internally and abroad of a growth induced unilateral carbon tax policy in a rich open economy we find that the environmental benefits fall and the economic costs rise when a global rather than a national perspective is employed

impacts of economic indicators on environmental degradation evidence from mena countries abstract during the last two decades the relationship between macroeconomic variables and environmental pollution has been studied extensively moreover the environmental kuznets curve ekc hypothesis and the pollution haven hypothesis phh have been tested in numerous countries however the number of empirical studies focusing on testing these two hypotheses for mena middle east and north africa countries is limited and cross sectional and or time series methods were mainly utilized while the number of studies using panel econometric methodology is quite scant by using balanced panel data methodology this study aims to investigate the links and direction of causality between per capita income foreign direct investment energy use and carbon dioxide emission for mena countries for the period of 1980 2013 this study finds partial support for both the ekc and the phh for mena countries furthermore the empirical results show that foreign direct investment inflows and energy use have exacerbated pollution in the majority of mena countries

unilateral co2 reductions and carbon leakage the consequences of international trade in oil and basic materials a recursively dynamic general equilibrium model featuring six world regions with trade in energy and non energy goods is used to simulate the period from 1990 through 2100 in 10 year intervals the simulations explore the effect of unilateral action by the oecd to curb global co2 emissions unilateral cuts create incentives for free riding by non participating regions so that global emissions are reduced by less than the amount that the oecd cuts back its regional emissions carbon leakage occurs through two channels first basic materials production increases in unconstrained regions resulting in increased carbon intensity of gdp second reductions in oecd oil imports cause the world oil price to fall leading to an increased energy intensity in the non participant regions in this paper we use a general equilibrium model to assess the extent to which these two mechanisms reduce the effectiveness of oecd reductions in curbing global co2 concentrations

allocation of carbon permits within a country a general equilibrium analysis of the united kingdom abstract the kyoto agreement includes international trade in carbon permits from 2008 we have used a cge model to evaluate methods of allocating permits within the uk auctioning is broadly similar to a carbon tax with revenues recycled to reduce other distortions grandfathering some permits free to large firms would mean a loss of recycling and possibly give windfall profits to foreigners alternatively regularly revised allocation using best practice estimates would be similar to recycling revenue as an output subsidy such a system could allow much of the potential double dividend to be realised though an auction system might still be preferable

climate change policy market structure and carbon leakage abstract the 1997 kyoto protocol on climate change obliges the industrialized countries to initiate the international effort of abating anthropogenic greenhouse gas ghg emissions if such an initiative is to be taken the associated competitive effects may lead to significant relocation of developed countries energy intensive production this paper examines this issue i adopt an oligopolistic structure combined with increasing returns to scale production technologies to represent the strategic interaction among the firms producing energy intensive products this representation is then embedded within a multi regional computable general equilibrium model which in turn is used for quantifying these relocational effects the results suggest that significant relocation of energy intensive industries away from the oecd may occur depending on the type of market structure with leakage rates as high as 130 in which case ghg control policies in the industrialized countries actually lead to higher global emissions

the assessment international competitiveness the concept of international competitiveness as applied to national economies is a popular one politicians businessmen and economists alike re fer to it in day to day discussion when looking at the external export import market share or trade balance performance of different countries indi cators are produced showing changes in or levels of various countries competitiveness e g the relative price or cost indices regularly published by the imf and the oecd or the absolute measures produced by organizations such as the geneva world economic forum and the lausanne institute for management development governments of ten instigate research on the matter as for instance in the case of the 1993 us competitiveness policy council orthe 1995 eu competitiveness advisory group yet it has recently been argued by paul krugman that competitiveness is a meaningless word when applied to national economies and the obsession with competitiveness is both wrong and dangerous krugman 1994 p 44 apositionkrugman forcefully reaffirms in his contribution to this issue of the oxford review of economic policy

comparing policies to combat emissions leakage border carbon adjustments versus rebates we explore conditions determining which anti leakage policies might be more effective complements to domestic greenhouse gas emissions regulation we consider four policies that could be combined with unilateral emissions pricing to counter effects on international competitiveness a border charge on imports a border rebate for exports full border adjustment and domestic output based rebating each option faces different potential legal hurdles in international trade law each also has different economic impacts while all can support competitiveness none is necessarily effective at reducing global emissions nor is it possible to rank order the options effectiveness depends on the relative emissions rates elasticities of substitution and consumption volumes we illustrate these results with simulations for the energy intensive sectors of three different economies the united states canada and europe although most controversial full border adjustment is usually most effective but output based rebating for key manufacturing sectors can achieve many of the gains

european emissions trading and the international competitiveness of energy intensive industries a legal and political evaluation of possible supporting measures abstract the eu emissions trading directive is expected by european energy intensive industries to harm their competitiveness vis a vis non european competitors many additional measures have thus been proposed to level the playing field and to protect the competitiveness of european energy intensive industries within the larger effort of reducing europe s greenhouse gas emissions and of meeting its obligations under the 1997 kyoto protocol this article evaluates a range of proposed measures based on a set of political and legal criteria including environmental effectiveness the need to consider differentiated commitments responsibilities and capabilities conformity with world trade law and european union law and europe s overall political interests we discuss measures that could be adopted by the european union and its member states such as direct support for energy intensive industries restrictions of energy intensive imports into the european union through border cost adjustments quotas or technical regulations and cost reimbursement for affected developing countries we also analyse measures available to multilateral institutions such as the united nations framework convention on climate change and its kyoto protocol and the world trade organisation we conclude with a classification of the discussed measures with red unfeasible yellow potentially feasible or green feasible labels

impacts of climate policy on the competitiveness of canadian industry how big and how to mitigate competitiveness concerns have been at the forefront of climate policy debates in canada particularly as a result of its high energy intensity and significant exposure to international markets this paper uses a dynamic computable general equilibrium model to assess the likely impacts on sectoral competitiveness that would accompany efforts to meet greenhouse gas mitigation targets that have been set by the canadian government additionally it evaluates several design mechanisms that could be used to reduce the negative competiveness impacts associated with adoption of domestic climate policies the analysis suggests that several sectors would likely face significant competiveness challenges under a reference scenario in which permits are given to emitters in lump sum however it finds that competiveness impacts can be minimized by using output based recycling of permits or by using border tax adjustments

output based allocation of emissions permits for mitigating tax and trade interactions the allocation of tradable emissions permits has important efficiency as well as distributional effects when tax and trade distortions are taken into account we compare different rules for allocating carbon allowances within sectors lumpsum grandfathering output based allocation oba auctioning and among sectors historical emissions or value added shares the output subsidies implicit in oba mitigate tax interactions unlike grand fathering oba with sectoral distributions based on value added is similar to revenue recycling with auctioning oba based on historical emissions supports heavier polluters more effectively counter acting carbon leakage but at higher welfare costs less energy intensive sectors are also sensitive to allocation rules

a whiter shade of pale on the political economy of regulatory instruments we consider an intertemporal policy game between changing governments that differ in their attitudes towards a particular feature of market outcomes exemplified with environmental pollution when in power a government will choose policy instruments and set strictness of regulation with a view to influencing the policy of future possibly different governments we demonstrate that a brown government favours emission quotas over effluent taxes as quotas establish property rights that are costly to reverse conversely a green government prefers to regulate by taxes in order to limit the incentives of future brown governments to ease regulations strategic behaviour tends to exaggerate policy differences making green governments greener and brown governments browner compared to when such strategic considerations were not an issue jel d81 d9 h23 l51 q28 q38

carbon taxes with exemptions in an open economy a general equilibrium analysis of the german tax initiative abstract sectoral exemptions from environmental regulation are applied in many countries to avoid adverse adjustment effects in specific industries the problem with exemptions is that they can make environmental policy more costly our paper analyzes the welfare costs of exemptions in environmental policy together with the issue of unilateral carbon taxes in an open economy several countries within the eu have introduced or contemplated unilateral taxes to reduce anthropogenic co2emissions taxes which are unilaterally imposed in an open economy can have significant impacts on production and employment of energy and export intensive industries to save jobs by maintaining international competitiveness most co2taxation schemes include exemptions for energy and export intensive industries as a compromise between environmental objectives and employment in these sectors this paper shows that such compromises are costly as the tax base narrows the dead weight loss increases our calculations illustrate this point in the framework of a static general equilibrium model for west germany calibrated to 1990 data we evaluate the excess costs of exemptions as a means of saving jobs in specific industries relative to an alternative instrument a uniform carbon tax cum wage subsidy which achieves an identical level of national emissions and employment at a fraction of the cost