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GTAP Resource #3668

"Unilateral climate policy and competitiveness: Differential emission pricing from a sectoral, regional and global perspective"
by Böhringer, Christoph and Victoria Alexeeva-Talebi

Unilateral emission reduction commitments raise concerns on international competitiveness and emission leakage that result in preferential regulatory treatment of domestic energy-intensive and trade-exposed industries. Our analysis illustrates the potential pitfalls of climate policy design which narrowly focuses on competitiveness concerns about energy-intensive and trade-exposed branches. The sector-specific gains of preferential regulation in favour of these branches must be traded off against the additional burden imposed on other industries and economy-wide excess costs to meet the unilateral emission reduction target. From the perspective of global cost-effectiveness, however, preferential emission pricing for domestic energy-intensive and trade-exposed sectors can reduce leakage and thereby lower overall cost of cutting global emissions as compared to uniform emission pricing.

JEL Classification: D58, H21, H22, Q48
Keywords: unilateral climate policy design, leakage, competitiveness

Resource Details (Export Citation) GTAP Keywords
Category: 2011 Conference Paper
Status: Published
By/In: Presented at the 14th Annual Conference on Global Economic Analysis, Venice, Italy
Date: 2011
Created: Alexeeva-Talebi, V. (4/19/2011)
Updated: Alexeeva-Talebi, V. (4/19/2011)
Visits: 1,020
- Climate change policy

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