Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/69598
Authors: 
Baylis, Kathy
Fullerton, Don
Karney, Dan
Year of Publication: 
2013
Series/Report no.: 
CESifo Working Paper: Resource and Environment Economics 4101
Abstract: 
We extend the model of Fullerton, Karney, and Baylis (2012 working paper) to explore cost-effectiveness of unilateral climate policy in the presence of leakage. We ignore the welfare gain from reducing greenhouse gas emissions and focus on the welfare cost of the emissions tax or permit scheme. Whereas that prior paper solves for changes in emissions quantities and finds that leakage maybe negative, we show here that all cases with negative leakage in that model are cases where a unilateral carbon tax results in a welfare loss. With positive leakage, however, a unilateral policy can improve welfare.
Subjects: 
trade and environment
pollution havens
unilateral climate policy
JEL: 
H23
Q28
Q48
Q58
Document Type: 
Working Paper

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