Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/123399 
Year of Publication: 
2009
Series/Report no.: 
WWZ Discussion Paper No. 02/09
Publisher: 
University of Basel, Center of Business and Economics (WWZ), Basel
Abstract: 
In the absence of a broad international agreement, national climate policies are less efficient, due to carbon leakage, and more costly, due to causing unemployment and a loss of competitiveness on international markets. As, in many countries, a substantial fraction of emissions results from the production of intermediate goods, such as electricity or transportation services, we investigate whether the above negative side-effects can be addressed by a policy mix that (partially) contains the effects of climate policy to the intermediate goods sector. We use a four-sector general equilibrium model to study a policy mix that consists of taxing emissions and subsidizing the intermediate good. We show that such containment is a second-best approach to combat carbon leakage and to maintain a favorable international market position. Also, it can help to reduce climate-policy-induced unemployment.
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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