Impact of Carbon Price Policies on U.S. Industry
97 Pages Posted: 26 Dec 2008 Last revised: 26 May 2014
Date Written: November 2008
Abstract
This paper informs the discussion of carbon price policies by examining the potential for adverse impacts on domestic industries, with a focus on detailed sector-level analysis. The assumed policy scenario involves a unilateral economy-wide $10/ton CO2 charge without accompanying border tax adjustments or other complementary policies. Four modeling approaches are developed as a proxy for the different time horizons over which firms can pass through added costs, change input mix, adopt new technologies, and reallocate capital. Overall, we find that a readily identifiable set of industries experience particularly adverse impacts as measured by reduced output and that the relative burdens on different industries are remarkably consistent across the four time horizons. Output rebounds considerably over longer time horizons, and the adverse impacts on profits diminish even more rapidly in most cases. Over the short term employment losses mirror output declines, while gains in other industries fully offset the losses over the longer horizons. At the same time, leakage abroad is considerable in some sectors, particularly when reductions in exports are considered.
Keywords: carbon price, competitiveness, input-output analysis
JEL Classification: F14, D 21, D57, D58, H23
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Reconciling Climate Change and Trade Policy
By Arvind Subramanian, Aaditya Mattoo, ...
-
Comparing Policies to Combat Emissions Leakage: Border Carbon Adjustments versus Rebates
By Carolyn Fischer and Alan K. Fox
-
Trade In'Virtual Carbon': Empirical Results and Implications for Policy
By Giles Atkinson, Kirk Hamilton, ...
-
Global Welfare Implications of Carbon Border Taxes
By Daniel Gros
-
The Global Effects of Subglobal Climate Policies
By Christoph Böhringer, Carolyn Fischer, ...
-
By Christoph Boehringer, Jared C. Carbone, ...
-
The Impact on Japanese Industry of Alternative Carbon Mitigation Policies
By Makoto Sugino, Toshi H. Arimura, ...
-
Unilateral Climate Policy: Can OPEC Resolve the Leakage Problem?
By Christoph Böhringer, Knut Einar Rosendahl, ...