Optimal Emission Pricing in the Presence of International Spillovers: Decomposing Leakage and Terms-of-Trade Motives

@article{Bhringer2010OptimalEP,
  title={Optimal Emission Pricing in the Presence of International Spillovers: Decomposing Leakage and Terms-of-Trade Motives},
  author={C. B{\"o}hringer and Andreas Lange and T. Rutherford},
  journal={Environmental Economics eJournal},
  year={2010}
}
  • C. Böhringer, Andreas Lange, T. Rutherford
  • Published 2010
  • Economics
  • Environmental Economics eJournal
  • Carbon leakage provides an efficiency argument for differentiated emission prices in favor of emission-intensive and trade-exposed sectors under unilateral climate policy. However, differential emission pricing can be used as a beggar-thy-neighbor policy to exploit terms of trade. Adopting an optimal tax framework, we propose a method to decompose the leakage and terms-of-trade motives for emission price differentiation. We employ our method for the quantitative impact assessment of unilateral… CONTINUE READING
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