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Title:Coordinating climate and trade policies: Pareto efficiency and the role of border tax adjustments PDF Logo
Authors:Keen, Michael
Kotsogiannis, Christos
Issue Date:2011
Series/Report no.:CESifo working paper: Public Finance 3494
Abstract:This paper explores the role of trade instruments in globally efficient climate policies, focusing on the central issue of whether border tax adjustment (BTA) is warranted when carbon prices differ internationally. It shows that tariff policy has a role in easing crosscountry distributional concerns that can make non-uniform carbon pricing efficient, and that Pareto-efficiency requires a form of BTA when carbon taxes in some countries are constrained, a special case being identified in which this has the simple structure envisaged in practical policy discussion. It also stresses - a point that has been overlooked in the policy debate - that the case for BTA depends critically on whether climate policies are pursued by carbon taxation or by cap-and-trade.
Subjects:environmental taxation
cap-and-trade
international trade
Pareto efficiency
border tax adjustments
JEL:H20
F18
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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