IDEAS home Printed from https://ideas.repec.org/a/ebl/ecbull/eb-04q20009.html
   My bibliography  Save this article

The effect of differentiated emission taxes: does an emission tax favor industry?

Author

Listed:
  • Shiro Takeda

    (Department of Economics, Kanto Gakuen University)

Abstract

Extending a standard 2x2 Heckscher-Ohlin model to incorporate emissions, this paper investigates the effect of differentiated emission taxes on output and emissions in a small open economy. The following results are derived. First, raising the emission tax imposed on one industry may increase the output of that industry. This result is quite surprising in the sense that such a paradoxical result can occur in a simple and standard model under fairly plausible values of parameters. By numerical examples and using a graphical method, it is also shown that the mechanism behind the result is the factor market adjustment effects which work through two different channels. Second, while strengthening emission taxes uniformly across industries always reduces the volume of emissions, strengthening emission tax unevenly may increase it.

Suggested Citation

  • Shiro Takeda, 2005. "The effect of differentiated emission taxes: does an emission tax favor industry?," Economics Bulletin, AccessEcon, vol. 17(3), pages 1-10.
    • Handle: RePEc:ebl:ecbull:eb-04q20009
    as

    Download full text from publisher

    File URL: http://www.accessecon.com/pubs/EB/2005/Volume17/EB-04Q20009A.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Batra, Raveendra N. & Casas, Francisco R., 1976. "A synthesis of the Heckscher-Ohlin and the neoclassical models of international trade," Journal of International Economics, Elsevier, vol. 6(1), pages 21-38, February.
    2. Brian R. Copeland & M. Scott Taylor, 1994. "North-South Trade and the Environment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(3), pages 755-787.
    3. Rauscher, Michael, 1994. "On Ecological Dumping," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 822-840, Supplemen.
    4. Robert N. Horn, 1988. "Analysis," Challenge, Taylor & Francis Journals, vol. 31(4), pages 56-58, July.
    5. Takeda, Shiro & 武田, 史郎, 2001. "The Effects of Differentiated Emission Taxes," Discussion Papers 2001-02, Graduate School of Economics, Hitotsubashi University.
    6. James R. MARKUSEN, 2021. "International Externalities And Optimal Tax Structures," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 16, pages 341-355, World Scientific Publishing Co. Pte. Ltd..
    7. Jones, Ronald W. & Easton, Stephen T., 1983. "Factor intensities and factor substitution in general equilibrium," Journal of International Economics, Elsevier, vol. 15(1-2), pages 65-99, August.
    8. Jota Ishikawa & Kazuharu Kiyono, 2000. "International Trade and Global Warming," CIRJE F-Series CIRJE-F-78, CIRJE, Faculty of Economics, University of Tokyo.
    9. Chambers,Robert G., 1988. "Applied Production Analysis," Cambridge Books, Cambridge University Press, number 9780521314275, January.
    10. Yohe, Gary W., 1979. "The backward incidence of pollution control--some comparative statics in general equilibrium," Journal of Environmental Economics and Management, Elsevier, vol. 6(3), pages 187-198, September.
    11. Barrett, Scott, 1997. "The strategy of trade sanctions in international environmental agreements," Resource and Energy Economics, Elsevier, vol. 19(4), pages 345-361, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yasuhiro Takarada & Masafumi Tsubuku & Madoka Okimoto, 2017. "Trade and the emissions trading system in a small open economy," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 19(2), pages 391-403, April.
    2. Yoshiaki Nakada, 2017. "The effects of energy and commodity prices on commodity output in a three-factor, two-good general equilibrium trade model," Papers 1711.10096, arXiv.org, revised Nov 2018.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:ebl:ecbull:v:17:y:2005:i:3:p:1-10 is not listed on IDEAS
    2. Haixiao Huang, Walter C. Labys, 2002. "Environment and trade: a review of issues and methods," International Journal of Global Environmental Issues, Inderscience Enterprises Ltd, vol. 2(1/2), pages 100-160.
    3. Kazuharu Kiyono & Jota Ishikawa, 2013. "Environmental Management Policy Under International Carbon Leakage," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 54(3), pages 1057-1083, August.
    4. Lisa Anouliès, 2015. "The Strategic and Effective Dimensions of the Border Tax Adjustment," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 17(6), pages 824-847, December.
    5. Thomas Eichner & Rüdiger Pethig, 2012. "Stable Climate Coalitions (Nash) and International Trade," CESifo Working Paper Series 3915, CESifo.
    6. Jayadevappa, Ravishankar & Chhatre, Sumedha, 2000. "International trade and environmental quality: a survey," Ecological Economics, Elsevier, vol. 32(2), pages 175-194, February.
    7. Pelkmans, Jacques, 2003. "European Integration, Deepening and Widening Economic Analysis," Conference papers 331166, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    8. Xiao Chen & Alan Woodland, 2013. "International trade and climate change," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(3), pages 381-413, June.
    9. Yoshiaki Nakada, 2018. "Deriving the factor endowment--commodity output relationship for Thailand (1920-1927) using a three-factor two-good general equilibrium trade model," Papers 1810.04819, arXiv.org.
    10. Bård Harstad, 2020. "Trade and Trees: How Trade Agreements Can Motivate Conservation Instead of Depletion," CESifo Working Paper Series 8569, CESifo.
    11. Beladi, Hamid & Chau, Nancy H. & Ali Khan, M., 2000. "North-South Investment Flows and Optimal Environmental Policies," Journal of Environmental Economics and Management, Elsevier, vol. 40(3), pages 275-296, November.
    12. Bård Harstad, 2022. "Trade, Trees, and Contingent Trade Agreements," CESifo Working Paper Series 9596, CESifo.
    13. Al Khourdajie, Alaa & Finus, Michael, 2020. "Measures to enhance the effectiveness of international climate agreements: The case of border carbon adjustments," European Economic Review, Elsevier, vol. 124(C).
    14. Hikari Ban, 2010. "Factor Substitution and Relative Factor Prices," Review of International Economics, Wiley Blackwell, vol. 18(3), pages 562-573, August.
    15. Brander, James A. & Scott Taylor, M., 1998. "Open access renewable resources: Trade and trade policy in a two-country model," Journal of International Economics, Elsevier, vol. 44(2), pages 181-209, April.
    16. David I. Stern, 2012. "Interfuel Substitution: A Meta‐Analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 26(2), pages 307-331, April.
    17. Alejandro Plastina & Lilyan Fulginiti, 2012. "Rates of return to public agricultural research in 48 US states," Journal of Productivity Analysis, Springer, vol. 37(2), pages 95-113, April.
    18. Gebhardt Flaig & Horst Rottmann, 2001. "Input Demand and the Short‐ and Long‐Run Employment Thresholds: An Empirical Analysis for the German Manufacturing Sector," German Economic Review, Verein für Socialpolitik, vol. 2(4), pages 367-384, November.
    19. Fabio Antoniou & Panos Hatzipanayotou & Phoebe Koundouri, 2012. "Second Best Environmental Policies under Uncertainty," Southern Economic Journal, John Wiley & Sons, vol. 78(3), pages 1019-1040, January.
    20. Kalsbach, Oliver & Rausch, Sebastian, 2024. "Pricing carbon in a multi-sector economy with social discounting," Journal of Environmental Economics and Management, Elsevier, vol. 125(C).
    21. Jota Ishikawa & Kazuharu Kiyono, 2000. "International Trade and Global Warming," CIRJE F-Series CIRJE-F-78, CIRJE, Faculty of Economics, University of Tokyo.

    More about this item

    Keywords

    differentiated taxes;

    JEL classification:

    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ebl:ecbull:eb-04q20009. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: John P. Conley (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.