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Carbon tariffs and environmental policy: Taxes versus standards

Author

Listed:
  • Tsaur‐Chin Wu
  • Chin‐Ho Lin
  • Chia‐Jen Chang

Abstract

This paper compares different environmental policies under free‐trade and carbon tariffs. Our findings are as follows. First, taxes and standards of exporting countries become laxer under carbon tariffs than free trade. Next, if an importing country adopts free trade, its welfare is relatively lower (higher) under taxes when the marginal pollution damage is smaller (greater). Conversely, if an importing country implements a carbon tariff policy, its welfare is relatively higher under taxes. Last, the importing country's free‐trade (carbon tariff) policy leads the exporting country to have lower (higher) welfare under taxes than standards.

Suggested Citation

  • Tsaur‐Chin Wu & Chin‐Ho Lin & Chia‐Jen Chang, 2024. "Carbon tariffs and environmental policy: Taxes versus standards," International Journal of Economic Theory, The International Society for Economic Theory, vol. 20(3), pages 269-302, September.
    • Handle: RePEc:bla:ijethy:v:20:y:2024:i:3:p:269-302
    DOI: 10.1111/ijet.12399
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