Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/145010
Authors: 
Parry, Ian
Year of Publication: 
2016
Series/Report no.: 
CESifo Working Paper 5975
Abstract: 
The efficiency effects of carbon pricing depend on how it impacts distortions in fossil fuel markets, most notably from local air pollution externalities. By offsetting these distortions, carbon pricing may generate significant net economic benefits, so it is in countries own interests to implement carbon pricing unilaterally rather than waiting for others to act. Net benefits are further enhanced if carbon pricing is revenue neutral and broader taxes cause substantial avoidance and evasion. Flexible international pricing regimes, allowing countries with high domestic environmental benefits or fiscal needs to set higher carbon prices, are more efficient than globally uniform carbon prices.
Subjects: 
carbon pricing
non-carbon externalities
air pollution
welfare effects
international price floors
fiscal linkages
JEL: 
Q54
Q58
H23
Document Type: 
Working Paper

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