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Full-Text Articles in Social and Behavioral Sciences
Can A Unilateral Carbon Tax Reduce Emissions Elsewhere?, Joshua Elliott, Don Fullerton
Can A Unilateral Carbon Tax Reduce Emissions Elsewhere?, Joshua Elliott, Don Fullerton
Don Fullerton
One country or sector that tries to reduce greenhouse gas emissions may fear that other countries or sectors will get a competitive advantage and increase emissions. Computable general equilibrium (CGE) models such as Elliott et al (2010a,b) indicate that 15% to 25% of abatement might be offset by this “leakage.” Yet the Fullerton et al (2012) simple two-sector analytical general equilibrium model shows an offsetting term with 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 this negative leakage term. We vary elasticities …
Leakage, Welfare, And Cost-Effectiveness Of Carbon Policy, Kathy Baylis, Don Fullerton, Daniel H. Karney
Leakage, Welfare, And Cost-Effectiveness Of Carbon Policy, Kathy Baylis, Don Fullerton, Daniel H. Karney
Don Fullerton
We extend the model of Fullerton et al (2012) to explore cost-effectiveness of unilateral climate policy in the presence of leakage. We ignore the welfare gain from reducing greenhouse gas emissions and focus on the welfare cost of the emissions tax or permit scheme. Whereas that prior paper solves for changes in emissions quantities and finds that leakage maybe negative, we show here that all cases with negative leakage in that model are cases where a unilateral carbon tax results in a welfare loss. With positive leakage, however, a unilateral policy can improve welfare.