Can a unilateral carbon tax reduce emissions elsewhere?

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. One country that tries to reduce greenhouse gas emissions may fear that other countries get a competitive advantage and increase emissions ("leakage"). Estimates from computable general equilibrium (CGE) models such as Elliott et al (2010a,b) indicate that 15% to 25% of abatement might be offset by leakage. Yet the Fullerton et al (2012) analytical general equilibrium model shows an offsetting term with negative leakage. To derive analytical expressions, their model is quite simple, with only one good from each country or sector, a fixed stock of capital, competitive markets, and many identical consumers that purchase both goods. Their model is not intended to be realistic, but only to demonstrate the potential for negative leakage. Most CGE models do not allow for negative leakage. In this paper, we use a full CGE model with many countries and many goods to measure effects in a way that allows for negative leakage. We vary elasticities of substitution and confirm the analytical model's prediction that negative leakage depends on the ability of consumers to substitute into the untaxed good and the ability of firms to substitute from carbon emissions into labor or capital. Terms of use: Documents inJEL-Code: Q480, Q540, Q580.

Institutional Analysis of the Global Climate Change Regime: Literature Review of International Climate Negotiations

“…Table 1 presents the articles reviewed. (Gupta & Mason, 2016) (Bodansky & Rajamani, 2013) (Ventura, et al, 2015) (Stewart, et al, 2013) (Moncel & Asselt, 2012) (Otto, et al, 2014) (Marcucci & Turton, 2013) (Kriegler, et al, 2015) (Riahi, et al, 2015) (Arroyo-Currás, et al, 2015) (Briner & Prag, 2013) (Chaturvedi, 2015) (Glomsrød, et al, 2013) (Gilley & Kinsella, 2015) Carbon tax 10 (Strand, 2013) (Alton, et al, 2014) (Wang & Li, 2015) (Gale, et al, 2013) ) (Elliott & Fullerton, 2013) (Sundar, et al, 2016) (Brooks, 2015) (Pezzey & Jotzo, 2013) (Lamperti, et al, 2015) Emission trading, trade, carbon markets 10 (Perthuis & Trotignon, 2013) (Uddin & Holtedahl, 2013) (Anon., 2013) ) (Lutz, et al, 2013) (Rabe, 2016) (Stiglitz, 2015) (Cormier, 2013) (Erickson, et al, 2014) (Sreekanth, et al, 2014) Carbon tax and cap-and trade 5 (Goulder & Schein, 2013) (Lui, 2016) (Sewalk, 2013) (Repetto, 2013) Minilateralism 8 (Debaere, et al, 2014) (Falkner, 2015) (Hjerpe & Nasiritousi, 2015) …”

“…They evaluated the effectiveness based on several dimensions such as sharing the political burden. Elliott & Fullerton (2013) completed another study in US and concluded that the carbon tax might be the best option. Subsequently Elliott & al concluded that carbon tax only in Annex1 countries would not be effective but the carbon tax should be adopted globally.…”

Frontiers of Climate Change Economics

“…As a result, demand and emissions in the policy inactive regions go up. Estimates of the size of this carbon leakage effect vary from 5 to over 30% of the reduction in policy active regions (Burniaux and Martins 2012;Böhringer et al 2017), but there are also extreme examples of negative leakage rates (Elliott and Fullerton 2014) and a leakage rate of 130% (Babiker 2005).…”

Capacity decisions with demand fluctuations and carbon leakage

“…3 Several other channels have been identi ed: the di usion of new green technologies can induce a negative leakage (Golombek and Hoel, 2004;Gerlagh and Kuik, 2007), subsequent changes of wealth can induce a positive or negative leakage (Elliott and Fullerton, 2013), and the change of the marginal environmental damage modi es the optimal emissions in other countries (see for instance the work on environmental coalitions by Carraro and Siniscalco, 1993;Barrett, 1994).…”