Targeted Carbon Tax Reforms

Posted: 12 Feb 2018 Last revised: 28 Sep 2019

See all articles by Maia King

Maia King

University of Oxford - Blavatnik School of Government

Bassel Tarbush

University of Oxford - Merton College

Alexander Teytelboym

University of Oxford - Department of Economics; University of Oxford - Institute for New Economic Thinking at the Oxford Martin School

Date Written: September 18, 2019

Abstract

In the presence of intersectoral linkages, sector-specific carbon tax changes can have complex general equilibrium effects. In particular, a carbon tax on the emissions of a sector can lead to an increase in aggregate emissions. We analytically characterise how incremental taxes on the emissions of any set of sectors affect aggregate emissions. We show that carbon tax reforms that target sectors based on their position in the production network can achieve a greater reduction in aggregate emissions than reforms that target sectors based on their direct emissions alone. We illustrate the effects of carbon tax reforms by calibrating our intersectoral network model to the economies of two countries.

Keywords: emissions tax, carbon tax, pollution tax, climate change, environmental tax reform, input-output linkages, intersectoral network

JEL Classification: D51, D62, H23, Q54

Suggested Citation

King, Maia and Tarbush, Bassel and Teytelboym, Alexander, Targeted Carbon Tax Reforms (September 18, 2019). European Economic Review, Vol. 119, 2019. Available at SSRN: https://ssrn.com/abstract=3120330 or http://dx.doi.org/10.2139/ssrn.3120330

Maia King

University of Oxford - Blavatnik School of Government ( email )

10 Merton St
Oxford, Oxfordshire OX1 4JJ
United Kingdom

Bassel Tarbush

University of Oxford - Merton College ( email )

Merton College
Oxford, OX1 4JD
United Kingdom

Alexander Teytelboym (Contact Author)

University of Oxford - Department of Economics ( email )

10 Manor Rd
Oxford, OX1 3UQ
United Kingdom

University of Oxford - Institute for New Economic Thinking at the Oxford Martin School ( email )

Eagle House
Walton Well Road
Oxford, OX2 6ED
United Kingdom

Register to save articles to
your library

Register

Paper statistics

Abstract Views
1,609
PlumX Metrics