TY  - JOUR
AU  - Böhringer,Christoph
AU  - Lange,Andreas
AU  - Rutherford,Thomas F.
TI  - Optimal Emission Pricing in the Presence of International Spillovers: Decomposing Leakage and Terms-of-Trade Motives
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15899
PY  - 2010
Y2  - April 2010
UR  - http://www.nber.org/papers/w15899
L1  - http://www.nber.org/papers/w15899.pdf
N1  - Author contact info:
Christoph Böhringer
University of Oldenburg
Department of Economics
D-26111 Oldenburg
Germany
E-Mail: christoph.boehringer@uni-oldenburg.de

Andreas Lange
University of Hamburg
Department of Economics
Von Melle Park 5
20146 Hamburg
Germany
Tel: +49-40-42838-4035
Fax: +49-40-42838-3243
E-Mail: andreas.lange@wiso.uni-hamburg.de

Thomas F. Rutherford
ETH Zurich
Zurichbergstrasse 18
8032 Zurich
Switzerland
E-Mail: rutherford@aae.wisc.edu
AB  - Carbon control policies in OECD countries commonly differentiate emission prices in favor of energy-intensive industries. While leakage provides a efficiency argument for differential emission pricing, the latter may be a disguised beggar-thy-neighbor policy to exploit terms of trade. Using an optimal tax framework, we propose a method to decompose the leakage motive and the terms-of-trade motive for emission price differentiation. We illustrate our method with a quantitative impact assessment of unilateral climate policies for the U.S. and EU economies. We conclude in these instances that complex optimal emission price differentiation does not substantially reduce the overall economic costs of carbon abatement compared with a simple rule of uniform emission pricing. 
ER  -