nep-res New Economics Papers
on Resource Economics
Issue of 2015‒12‒01
three papers chosen by

  1. Seven Reasons to Use Carbon Pricing in Climate Policy By Andrea Baranzini; Jeroen van den Bergh; Stefano Carattini; Richard Howarth; Emilio Padilla; Jordi Roca
  2. Environmental regulation with and without commitment under irreversible investments By Jean-Philippe Nicolaï
  3. Environmental tax competition under firm mobility and leakage By Robert C. Schmidt; Marco Runkel

  1. By: Andrea Baranzini (Haute Ecole de Gestion Genève, University of Apllied Sciences Western Switzerland); Jeroen van den Bergh (Institute of Environmental Science annd Technology (UAB); ICREA; Institute of Environmental Studies & Faculty of Economics and Business Administration (LSE)); Stefano Carattini (Haute Ecole de Gestion Genève, University of Apllied Sciences Western Switzerland; Grantham Research Institute on Climate Change and the Environment (LSE)); Richard Howarth (Environmental Studies Program, Dartmouth College); Emilio Padilla (Department of Applied Economics (UAB)); Jordi Roca (Faculty of Economics and Business (UB))
    Abstract: The idea of a global carbon price has been a recurrent theme in debates on international climate policy. Discarded at the Conference of Parties (COP) of Copenhagen in 2009, it remained part of deliberations for a climate agreement in subsequent years. Unfortunately, there is still much misunderstanding about the reasons for implementing a global carbon price. As a result, ideological and political resistance against it prospers. Here we present the main arguments in favor of a carbon price to stimulate a fair and well-informed discussion about climate policy instruments. This includes arguments that have received surprisingly little attention so far. It is stressed that a main reason to use carbon pricing is environmental effectiveness, so not only economic efficiency (including the special case of cost-effectiveness). In addition, we provide ideas on how to implement a uniform global carbon price, whether using a carbon tax or emissions trading.
    Date: 2015–11
  2. By: Jean-Philippe Nicolaï (ETH-Zürich)
    Abstract: This paper analyzes the long-term investment decisions of firms that are regulated by an emissions tax and that perceive a degree of market power in their respective output markets. Firms invest in abatement equipment that is fixed over the medium term (e.g., buying a new generator). This paper focuses on environmental regulation with and with- out commitment. In the commitment case, the government announces a long-run tax on emissions, and firms decide upon their investment levels. In the no-commitment case, the regulator announces a tax level and is free to modify it once firms have invested. This paper considers differentiated product goods and determines whether no-commitment regulation leads to more lenient or more stringent regulation than regulation with commitment.
    Keywords: Pollution permits; Imperfect competition; Investment; Strategic effects.
    JEL: L13 Q50 L51
    Date: 2015–11
  3. By: Robert C. Schmidt (Humboldt-Universitaet zu Berlin); Marco Runkel (Technische Universitaet Berlin)
    Abstract: We introduce a model in which countries tax or subsidize output in an imperfectly competitive industry. Wage effects prevent all firms from locating in the same country when policies differ. In the absence of environmental externalities, countries non-cooperatively set subsidy rates optimally. This holds when firms' location choices are exogenously fixed, and when they are endogenous. Under environmental externalities, subsidies are lower or converted into taxes, but tax competition leads to an inefficient outcome. The relation between the strength of the externalities and welfare is non-linear. Under some conditions, countries benefit when externalities become stronger, due to a coordinating effect.
    Keywords: tax competition, labor market, location choice, pollution, carbon leakage
    JEL: F12 F18 H23
    Date: 2015–10–26

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