Incidence of unilateral consumption taxes on world carbon emissions

Thomas Eichner and Rüdiger Pethig

Volkswirtschaftliche Diskussionsbeiträge from Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht

Abstract: This note investigates the suitability of unilateral consumption taxes for alleviating climate change in a two-period two-country general equilibrium model with a finite stock of fossil fuel. We analyze the incidence of a unilateral consumption tax in the first period on world carbon emissions. If countries are identical or if the taxing country imports both fossil fuel and consumption goods in the second period, increases in the tax rate lower first-period carbon emissions in both countries implying a negative rate of carbon leakage.

Keywords: unilateral consumption tax; world emissions; leakage (search for similar items in EconPapers)
JEL-codes: H22 Q38 Q58 (search for similar items in EconPapers)
Pages: 10 pages
Date: 2011
New Economics Papers: this item is included in nep-ene and nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:sie:siegen:149-11

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