TITLE:
Can a Carbon Tax Be Effective without a Grand Coalition?
AUTHORS:
Amnon Levy
KEYWORDS:
Carbon Tax; Abstinence; Understating Expectations; Guilt; Emissions
JOURNAL NAME:
Theoretical Economics Letters,
Vol.4 No.1,
February
12,
2014
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.