Leakage, Welfare, and Cost-Effectiveness of Carbon Policy

Kathy Baylis, Don Fullerton () and Daniel H. Karney

American Economic Review, 2013, vol. 103, issue 3, 332-37

Abstract: We extend the model of Fullerton, Karney, and Baylis (2012) 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 may be 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.

JEL-codes: Q54 Q58 (search for similar items in EconPapers)
Date: 2013
Note: DOI: 10.1257/aer.103.3.332
References: Add references at CitEc
Citations: View citations in EconPapers (33)

Downloads: (external link)
http://www.aeaweb.org/articles.php?doi=10.1257/aer.103.3.332 (application/pdf)
http://www.aeaweb.org/aer/ds/may2013/P2013_4376_ds.zip (application/zip)
http://www.aeaweb.org/aer/data/may2013/P2013_4376_app.pdf (application/pdf)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
Working Paper: Leakage, Welfare, and Cost-Effectiveness of Carbon Policy (2013)
Working Paper: Leakage, Welfare, and Cost-Effectiveness of Carbon Policy (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:aecrev:v:103:y:2013:i:3:p:332-37

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

American Economic Review is currently edited by Esther Duflo

More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().