Optimal tariffs and firm technology choice: An environmental approach

Nico Steffen

No 238, DICE Discussion Papers from Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)

Abstract: This paper analyzes environmental concerns by a government in a setting of rent-extracting strategic trade policy with endogenous firm investment into production technologies. The simple analysis highlights the importance of investment incentives caused by tariffs in general and shows that the resulting implications for the optimal tariff decision can be completely different between traditional tariff considerations and an environmentally conscious government. We show that an importing country in a dynamic setting with endogenous firm technology choices prefers to impose discriminatory tariffs both ex post and ex ante when emissions matter, while a commitment to uniform tariffs is optimally chosen when environmental concerns do not play a role.

Keywords: Climate policy; Carbon tariffs; Technology choice; Discriminatory tariffs (search for similar items in EconPapers)
JEL-codes: D24 F13 F18 Q58 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-ene, nep-env, nep-int and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:dicedp:238

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