Journal article
North–South asymmetry, unilateral environmental policy and carbon tariffs
Pacific Economic Review, Vol.28(2), pp.241-266
2023
Abstract
This paper focuses on the potential impact of a carbon tariff on carbon emissions, North–South trade and welfare. We use a North–South trade model, where North implements a unilateral environmental policy on domestic carbon-intensive industries followed by a carbon tariff on imports from South. Unlike the existing studies, we allow asymmetry in clean production technologies and marginal environmental damage. We show that a carbon tariff can reduce the global carbon emission via the use of a more advanced clean production technology in North, which increases the firm profit and welfare. However, improvement in welfare of North is associated with a decrease in global trade flows and welfare of South. We find that, in the presence of asymmetry in clean production technologies between North and South, a carbon tariff introduced by the North can eliminate carbon leakage, but the exports of South decrease below the pre-unilateral environmental policy level and hence North can potentially use a carbon tariff for trade protectionism in the name of reducing carbon leakage in South.
Details
- Title
- North–South asymmetry, unilateral environmental policy and carbon tariffs
- Authors
- Liming Hong (Author) - Xiamen University of TechnologyWei Huang (Corresponding Author) - Shanghai Lixin University of Accounting and FinanceSajid Anwar (Author) - University of the Sunshine Coast, Queensland, Indigenous and Transcultural Research Centre - LegacyXiaofeng Lv (Author) - Southwestern University of Finance and Economics
- Publication details
- Pacific Economic Review, Vol.28(2), pp.241-266
- Publisher
- John Wiley & Sons, Inc.
- DOI
- 10.1111/1468-0106.12401
- ISSN
- 1468-0106
- Organisation Unit
- University of the Sunshine Coast, Queensland; School of Business and Creative Industries; Indigenous and Transcultural Research Centre
- Language
- English
- Record Identifier
- 99656398202621
- Output Type
- Journal article
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