Energy pricing impact on domestic economy under recent climate action

Tomoyuki Sakamoto and Shunsuke Managi

Economic Analysis and Policy, 2015, vol. 48, issue C, 150-162

Abstract: This article analyzes the adverse competitive effect of climate policy on domestic supply using industry-level data from forty countries. In accordance with the theoretical literature, we define the competitive effect as the difference between the energy price elasticities of demand and supply; the magnitude of the competitive effect is captured by estimating the supply and demand functions. We find adverse competitive effects for certain country–industry pairs; however, these impacts are small. Additional simulation analysis shows potential for substitution between an imported product and a domestic good in less energy-intensive sectors. The results indicate the importance of considering industrial characteristics when formulating and implementing a climate policy.

Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:48:y:2015:i:c:p:150-162

DOI: 10.1016/j.eap.2015.11.005

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