Leakage, Welfare, and Cost-Effectiveness of Carbon Policy

Kathy Baylis, Don Fullerton () and Dan Karney

No 4101, CESifo Working Paper Series from CESifo

Abstract: We extend the model of Fullerton, Karney, and Baylis (2012 working paper) 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 maybe 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.

Keywords: trade and environment; pollution havens; unilateral climate policy (search for similar items in EconPapers)
JEL-codes: H23 Q28 Q48 Q58 (search for similar items in EconPapers)
Date: 2013
References: View complete reference list from CitEc
Citations: View citations in EconPapers (34)

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Related works:
Journal Article: Leakage, Welfare, and Cost-Effectiveness of Carbon Policy (2013)
Working Paper: Leakage, Welfare, and Cost-Effectiveness of Carbon Policy (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_4101

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