Taxing Carbon Under Market Incompleteness

29 Pages Posted: 18 Sep 2013

See all articles by Valentina Bosetti

Valentina Bosetti

Bocconi University; CMCC - Euro Mediterranean Centre for Climate Change

Marco Maffezzoli

Bocconi University - Department of Economics

Date Written: September 17, 2013

Abstract

This paper is the first attempt, to the best of our knowledge, to study the impact of a carbon tax by means of a heterogeneous agents model. The objectives of the paper are two: i) To assess how the results of a representative agent model compare to those coming from a model accounting for heterogeneity across agents when evaluating aggregate economic and environmental impacts of a carbon tax; ii) To assess the distributional implications of a carbon tax (and equivalent cap) and how they can be mitigated through different recycling schemes or allocations.

Keywords: Carbon Tax, Double Dividend, Heterogeneous Agents Model

JEL Classification: Q58, Q54, E2

Suggested Citation

Bosetti, Valentina and Maffezzoli, Marco, Taxing Carbon Under Market Incompleteness (September 17, 2013). FEEM Working Paper No. 72.2013, Available at SSRN: https://ssrn.com/abstract=2326982 or http://dx.doi.org/10.2139/ssrn.2326982

Valentina Bosetti

Bocconi University

Via Gobbi 5
Milan, 20136
Italy

CMCC - Euro Mediterranean Centre for Climate Change

via Augusto Imperatore, 16
Lecce, I-73100
Italy

Marco Maffezzoli (Contact Author)

Bocconi University - Department of Economics ( email )

Via Gobbi 5
Milan, 20136
Italy

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