NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Leakage, Welfare, and Cost-Effectiveness of Carbon Policy

Kathy Baylis, Don Fullerton, Daniel H. Karney

NBER Working Paper No. 18898
Issued in March 2013
NBER Program(s):   EEE   PE

We extend the model of Fullerton, Karney, and Baylis (2012 working paper) to explore cost-effectiveness of unilateral climate policy in the presence of leakage. We ignore the welfare gain from reducing greenhouse gas emissions and focus on the welfare cost of the emissions tax or permit scheme. Whereas that prior paper solves for changes in emissions quantities and finds that leakage may be negative, we show here that all cases with negative leakage in that model are cases where a unilateral carbon tax results in a welfare loss. With positive leakage, however, a unilateral policy can improve welfare.

You may purchase this paper on-line in .pdf format from SSRN.com ($5) for electronic delivery.

Information about Free Papers

You should expect a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy.

If you usually get free papers at work/university but do not at home, you can either connect to your work VPN or proxy (if any) or elect to have a link to the paper emailed to your work email address below. The email address must be connected to a subscribing college, university, or other subscribing institution. Gmail and other free email addresses will not have access.

E-mail:

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w18898

Published: Kathy Baylis & Don Fullerton & Daniel H. Karney, 2013. "Leakage, Welfare, and Cost-Effectiveness of Carbon Policy," American Economic Review, American Economic Association, vol. 103(3), pages 332-37, May. citation courtesy of

Users who downloaded this paper also downloaded these:
Elliott and Fullerton w18897 Can a Unilateral Carbon Tax Reduce Emissions Elsewhere?
Goulder and Schein w19338 Carbon Taxes vs. Cap and Trade: A Critical Review
Moreno Cruz and Taylor w18908 A Spatial Approach to Energy Economics
Fullerton, Karney, and Baylis w17001 Negative Leakage
Heal and Millner w18929 Uncertainty and Decision in Climate Change Economics
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us