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Environmental and economic analyses of the carbon tax based on the imputed price using applied general equilibrium model: taxation on the upper industrial sectors

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  • Ken’ichi Matsumoto
  • Toyoo Fukuda

Abstract

Considering the latest arguments on global warming, CO 2 emissions reduction by not only developed countries but also by developing countries is becoming a pivotal issue. Although the worldwide uniform-rate carbon tax (UCT) is thought to be a cost-effective method to reduce CO 2 emissions, it places heavy economic burdens on developing countries. Because such a policy is likely to be opposed by developing countries and is against “common but differentiated responsibilities” of the UNFCCC, it is unlikely to be successfully implemented. This article discusses the effects of the worldwide differentiated-rate carbon tax from the policy viewpoint regarding environmental (CO 2 ) and economic (gross domestic product) aspects. The tax, based on the imputed price of carbon (ICT), was compared with UCT by simulation analysis using the applied general equilibrium model. The world economy was classified into 15 industries and 14 regions in the model. Each tax was imposed on the upper industrial sectors. As ICT reduced CO 2 emissions slightly less than UCT, it was found to generate positive GDP effects on developing countries, unlike UCT. With regard to the importance of worldwide introduction of CO 2 abating policies and avoidance of excessive economic burdens on developing countries, ICT has higher economic equity and policy effectiveness than UCT. Copyright Springer Japan 2006

Suggested Citation

  • Ken’ichi Matsumoto & Toyoo Fukuda, 2006. "Environmental and economic analyses of the carbon tax based on the imputed price using applied general equilibrium model: taxation on the upper industrial sectors," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 8(1), pages 89-102, December.
  • Handle: RePEc:spr:envpol:v:8:y:2006:i:1:p:89-102
    DOI: 10.1007/BF03353994
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    Cited by:

    1. Beltrán, Allan & Alatorre, José Eduardo & Ferrer, Jimy & Galindo, Luis Miguel, 2017. "Efectos potenciales de un impuesto al carbono sobre el producto interno bruto en los países de América Latina: estimaciones preliminares e hipotéticas a partir de un metaanálisis y una función de tran," Documentos de Proyectos 41867, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    2. Lian-Biao Cui & Ma-Lin Song, 2017. "Designing and Forecasting the Differentiated Carbon Tax Scheme Based on the Principle of Ability to Pay," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 34(01), pages 1-25, February.
    3. Chiradip Chatterjee & Nafisa Halim & Pallab Mozumder, 2022. "Energy conservation and health risk reduction: an experimental investigation of punishing vs. rewarding incentives," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 24(4), pages 551-570, October.
    4. Kenichi Matsumoto & Toyoo Fukuda, 2006. "Analysis of the Effects of the Carbon Taxes Based on Imputed Prices of Carbon," EcoMod2006 272100061, EcoMod.

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