Can a carbon tax be effective without a grand coalition?

Authors

Amnon Levy, University of WollongongFollow

RIS ID

88068

Publication Details

Levy, A. (2014). Can a carbon tax be effective without a grand coalition?. Theoretical Economics Letters, 4 12-18.

Abstract

This paper analyzes an interaction between a carbon-tax collecting and investing coalition of rich countries, abstaining rich countries and poor countries. The non-coalition countries may suffer from loss of reputation and guilt and may overstate the emission-moderating effect of the carbon tax. As long as these three types of countries react to their counterparts' emissions, taxing carbon-dioxide emissions unilaterally does not necessarily reduce the global emissions. Nor does it necessarily moderate the emissions of the coalition.