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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
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Abstract:
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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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Find this file in the \Papers\1085\ folder of this CD-ROM.
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