Can a Small Nation Gain from Introducing a Carbon Tax Early?

Diderik Lund

No 1064, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Carbon dioxide emissions may cause global warming. But own emissions have negligible effects for a small nation, which may thus regard carbon taxes as distortionary. Such taxes may have other effects, however. When research and development (R&D) has positive external effects, carbon taxes may correct for some of these, by giving incentives for R&D in particular directions. This may be beneficial when the nation faces a binding international agreement on reducing emissions in a future period. This effect is analysed, both for a case with a carbon tax alone, and for two different cases with R&D subsidies as well. Finally, a different international agreement is considered, under which the tax revenue is collected domestically.

Keywords: Carbon Tax; Global Warming; Research and Development (search for similar items in EconPapers)
JEL-codes: Q25 Q32 (search for similar items in EconPapers)
Date: 1994-12
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Citations: View citations in EconPapers (2)

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Working Paper: Can a Small Nation Gain? From Introducing a Carbon Tac Early (1993)
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