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Is a uniform price on Carbon desirable? A public finance perspective

Author

Listed:
  • Felix Bierbrauer

    (University of Cologne)

Abstract

Should climate policy rely on a price of Carbon that is uniform across sectors? This paper studies this question from a public finance perspective. It is found that a justification for a uniform price can be given, but it relies on strong assumptions, among them indifference with respect to the distributive consequences of climate policy. Distributive considerations may imply that sectors whose output is consumed mostly by “the poor” should contribute less to meeting the government’s emission target, whereas sectors whose output is consumed mostly by “the rich” should contribute more.

Suggested Citation

  • Felix Bierbrauer, 2024. "Is a uniform price on Carbon desirable? A public finance perspective," ECONtribute Discussion Papers Series 299, University of Bonn and University of Cologne, Germany.
    • Handle: RePEc:ajk:ajkdps:299
    as

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    File URL: https://www.econtribute.de/RePEc/ajk/ajkdps/ECONtribute_299_2024.pdf
    File Function: First version, 2024
    Download Restriction: no
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    References listed on IDEAS

    as
    1. Dominik Sachs & Aleh Tsyvinski & Nicolas Werquin, 2020. "Nonlinear Tax Incidence and Optimal Taxation in General Equilibrium," Econometrica, Econometric Society, vol. 88(2), pages 469-493, March.
    2. Sachs, Dominik & Tsyvinski, Aleh & Werquin, Nicolas, 2020. "Nonlinear Tax Incidence And Optimal Taxation In General Equilibrium," Munich Reprints in Economics 84782, University of Munich, Department of Economics.
    3. Salanié, Bernard, 2011. "The Economics of Taxation," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262016346, April.
    4. Mikhail Golosov & Aleh Tsyvinski & Nicolas Werquin, 2014. "A Variational Approach to the Analysis of Tax Systems," NBER Working Papers 20780, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Climate policy; equity-efficiency trade-off; optimal taxation;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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