Econometric Society 57th European Meeting
25th August 2002 - 28th August 2002, Venice, Italy

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CAN CARBON TAX EAT OPEC'S RENTS?


Category: Economic Theory
Environmental Policy
Wednesday 28th August 2002, 09:30 - 11:00, Room: 5.9
Session Chair(s): Fridrik Baldursson, University of Iceland, ICELAND

Presenter(s): Liski, Matti

Co-Author(s): Tahvonen, Olli

Keyword(s): climate change, energy, nonrenewable resources

JEL(s): Q30, Q40

Abstract:

We study the effects of carbon dioxide taxation on fossil-fuel markets where the supply is regulated by a resource-exporting cartel. To clarify some previous results, we show that the optimal tax set by a coalition of buyers is not a neutral Pigouvian tax but a combination of a tariff and Pigouvian tax. Because of the tariff element, the tax can shift more rents from the cartel than the pollution causes damage-related costs. Thus, the pollution problem accompanied by the coordination of carbon taxation can entail net benefits for the buyer side.


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Paper Reference Number: 1085

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57th European Meeting
25th August 2002 - 28th August 2002, Venice, Italy

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