Carbon pricing under binding political constraints

Jesse D. Jenkins and Valerie J. Karplus

No wp-2016-44, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: The economic prescription for climate change is clear: price carbon dioxide (CO 2 ) and other greenhouse gas emissions to internalize climate damages. In practice, a variety of political economy constraints prevent the introduction of a carbon price equal to the full social cost of emissions. This paper develops insights about the design of climate policy in the face of binding political constraints, formulated here as limits on the CO 2 price itself, on increases in energy prices, and on energy consumer and producer surplus loss.

Keywords: Carbon tax; Environmental economics; Climate change (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (7)

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