Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/238217 
Year of Publication: 
2021
Series/Report no.: 
Economics Working Paper Series No. 21/360
Publisher: 
ETH Zurich, CER-ETH - Center of Economic Research, Zurich
Abstract: 
Economists tend to view a uniform emissions price as the most cost-effective approach to reducing greenhouse gas emissions. This paper offers a different view, focusing on economies where society values the well-being of future generations more than private actors. Employing analytical and numerical general equilibrium models, we show that a uniform carbon price is efficient only under restrictive assumptions about technology homogeneity and intertemporal decision-making. Non-uniform pricing spurs capital accumulation and benefits future generations. Depending on sectoral heterogeneity in the substitutability between capital and energy inputs, we find that optimal carbon prices differ widely across sectors and yield substantial welfare gains relative to uniform pricing
JEL: 
Q54
Q58
Q43
H23
C61
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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