The Strategic Value of Carbon Tariffs

Christoph Böhringer, Jared Carbone and Thomas F. Rutherford

American Economic Journal: Economic Policy, 2016, vol. 8, issue 1, 28-51

Abstract: We ask whether the threat of carbon tariffs might lower the cost of reductions in world carbon emissions by inducing unregulated regions to adopt emission controls. We use a numerical model to generate payoffs of a game in which a coalition regulates emissions and chooses whether to employ carbon tariffs against unregulated regions. Unregulated regions respond by abating, retaliating, or ignoring the tariffs. In the Nash equilibrium, the use of tariffs is a credible and effective threat. It induces cooperation from noncoalition regions that lowers the cost of global abatement substantially relative to the case where the coalition acts alone. (JEL D58, F13, F18, H23, Q54, Q58)

JEL-codes: D58 F13 F18 H23 Q54 Q58 (search for similar items in EconPapers)
Date: 2016
Note: DOI: 10.1257/pol.20130327
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Citations: View citations in EconPapers (65)

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Related works:
Working Paper: The Strategic Value of Carbon Tariffs (2014)
Working Paper: The Strategic Value of Carbon Tariffs (2014)
Working Paper: The Strategic Value of Carbon Tariffs (2013)
Working Paper: The Strategic Value of Carbon Tariffs (2013)
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