Can a Carbon Tax Be Effective without a Grand Coalition?

Amnon Levy

School of Economics, University of Wollongong, Wollongong, Australia.

DOI: 10.4236/tel.[phone]                

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.

Keywords

Carbon Tax; Abstinence; Understating Expectations; Guilt; Emissions

Conflicts of Interest

The authors declare no conflicts of interest.

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