Can a unilateral carbon tax reduce emissions elsewhere?

摘要

tOne country or sector that tries to reduce greenhouse gas emis-sions may fear that other countries or sectors will get a competitiveadvantage and increase emissions. Computable general equilibrium(CGE) models such as Elliott et al. (2010a, 2010b) indicate that15-25% of abatement might be offset by this "leakage." Yet theFullerton et al. (2012) simple two-sector analytical general equi-librium model shows an offsetting term with negative leakage. Inthis paper, we use a full CGE model with many countries and manygoods to measure effects in a way that allows for this negativeleakage term. We vary elasticities of substitution and confirm theanalytical model's prediction that whether this negative leakageterm offsets the positive leakage terms depends on the ability ofconsumers to substitute into the untaxed good relative to the abil-ity of firms to substitute from carbon emissions into labor or capital.