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Is a Uniform Price on Carbon Desirable? A Public Finance Perspective

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  • Felix Bierbrauer

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," CESifo Working Paper Series 11201, CESifo.
    • Handle: RePEc:ces:ceswps:_11201
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp11201.pdf
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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, December.
    4. Emmanuel Saez, 2001. "Using Elasticities to Derive Optimal Income Tax Rates," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 68(1), pages 205-229.
    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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