Social welfare Promotion, Carbon Emission and Tax

Ellalee, Haider and Alali, Walid Y. (2022): Social welfare Promotion, Carbon Emission and Tax. Forthcoming in: (20 September 2022)

Abstract

The objective of this research is to find the preferable carbon taxation regime to achieve net-zero carbon emissions and enhance social welfare levels. Two regimes were discussed in this paper, including a carbon tax at the aggregate level of social welfare (CTTW) and a carbon tax at the level of single social welfare (CTSW). The results present a preferable regime depending on the substitution of the product and product price flexibility of demand. Not only does industrial transformation bring about changes in the substitution of the product and demand flexibility in product prices, but as well both regimes have a serious effect on achieving net zero carbon emissions and enhancing the level of social welfare.

• Item Type: MPRA Paper
• Language: English
• Keywords: Social welfare, Carbon Tax, Carbon Emission, Environment
• Subjects: D - Microeconomics > D6 - Welfare Economics; I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty > I31 - General Welfare, Well-Being; K - Law and Economics > K2 - Regulation and Business Law > K23 - Regulated Industries and Administrative Law

References

1. Baumol WJ. On taxation and the control of externalities. Am. Econ. Rev. 1972;62(3):307–322.

2. Borzuei D, Moosavian SF, Ahmadi A, et al. An experimental and analytical study of influential parameters of parabolic trough solar collector. J. Renew. Energy Environ. 2021;8(4):52–66.

3. Moosavian SF, Zahedi R, Hajinezhad A. Economic, environmental and social impact of carbon tax for Iran: a computable general equilibrium analysis. Energy Sci. Eng. 2022;10(1):13–29. doi:10.1002/ese3.1005.

4. Energy & Climate Intelligence Unit 2021. https://eciu.net.

5. Shaffer S. Optimal linear taxation of polluting oligopolists. J Regul Econ. 1995;7(1):85–100. doi:10.1007/ BF01062781.

6. Lee SH. Optimal taxation for polluting oligopolists with endogenous market structure. J. Regul. Econ. 1999;15(3):293–308. doi:10.1023/A:1008034415251

7. Garcia A, Leal M, Lee SH. Time-inconsistent environmental policies with a consumer-friendly firm: tradable permits versus emission tax. Int. Rev. Econ. Financ. 2018;58:523–537. doi:10.1016/j.iref.2018.06.001

8. Leal M, Garcia A, Lee SH. The timing of environmental tax policy with a consumer-friendly firm. Hitotsub. J. Econ. 2018;59:25–43.

9. Liu W, Li Y, Liu T, et al. How to promote low-carbon economic development? A comprehensive assessment of carbon tax policy in China. IJERPH. 2021;18(20): 10699. doi: http://dx.doi.org/10.3390/ijerph182010699

10. Anand KS, Giraud-Carrier FC. Pollution regulation of competitive markets. Manage Sci. 2020; 66(9): 4193–4206. doi:10.1287/mnsc.2019.3413

11. Wang Q, Xu X, Liang K. The impact of environmental regulation on firm performance: evidence from the chinese cement industry. J Environ Manage. 2021; 299: 113596. doi:10.1016/j.jenvman.2021.113596

12. Kotl'an I, Nvemec D, Kotl'anov'a E, et al. European green deal: environmental taxation and its sustainability in conditions of high levels of corruption. Sustainability. 2021; 13(4):1981. doi:10.3390/su13041981

13. Wang B, Liu L, Huang GH, et al. Effects of carbon and environmental tax on power mix planning - A case study of Hebei province, China. Energy. 2018;143: 645–657. doi:10.1016/j.energy.2017.11.025

14. Pradhan BB, Shrestha RM, Pandey A, et al. Strategies to achieve net zero emissions in Nepal. Carbon Manag. 2018; 9(5):533–548. doi: 10.1080/17583004. 2018.1536168

15. Quarton CJ, Samsatli S. How to incentivise hydrogen energy technologies for net zero: whole-system value chain optimisation of policy scenarios. Sustain. Prod. Consump. 2021; 27: 1215–1238. doi:10.1016/j.spc.2021. 02.007.

16. Bachus K, Van Ootegem L, Verhofstadt E. No taxation without hypothecation: towards an improved understanding of the acceptability of an environmental tax reform. J. Environ. Pol. Plan. 2019;21(4):321–332. doi: 10.1080/1523908X.2019.1623654.

17. Ouchida Y, Goto D. Strategic non-use of the government’s precommitment ability for emissions taxation: environmental R&D formation in a Cournot duopoly. Aust. Econ. Pap. 2022; 61(1):181–206. doi:10.1111/1467-8454.12243

18. Nie PY, Wang C, Wen HX. Optimal tax selection under monopoly: emission tax vs carbon tax. Environ Sci Pollut Res. 2022; 29(8): 12157–12163. doi: 10.1007/s11356-021-16519-1

19. Millot A, Krook-Riekkola A, Maïzi N. Guiding the future energy transition to net-zero emissions: les- sons from exploring the differences between France and Sweden. Energ. Policy. 2020; 139: 111358. doi:10.1016/j.enpol.2020.111358

20. Cheng P, Ji G, Zhang G, et al. Y. A closed-loop supply chain network considering consumer’s low carbon preference and carbon tax under the cap-and-trade regulation. Sustain. Prod. Consump. 2022; 29:614–635. doi:10.1016/j.spc.2021.11.006.

21. Nilsson LJ, Bauer F, Åhman M, et al. V. An industrial policy framework for transforming energy and emis- sions intensive industries towards zero emissions. Clim. Policy. 2021; 21(8):1053–1065. doi:10.1080/14693062.2021.1957665

22. Singh N, Vives X. Price and quantity competition in a differentiated duopoly. Rand. J. Econ. 1984;15(4): 546–554. doi:10.2307/2555525.

23. Buccella D, Fanti L, Gori L. To abate, or not to abate? A strategic approach on green production in cournot and bertrand duopolies. Energ. Econ. 2021; 96:105164. doi:10.1016/j.eneco.2021.105164.

24. Lambertini L, Poyago-Theotoky J, Tampieri A. Cournot competition and “green” innovation: an inverted-U relationship. Energ. Econ. 2017; 68: 116–123. doi:10.1016/j.eneco.2017.09.022

25. Xu L, Chen Y, Lee SH. Emission tax and strategic environmental corporate social responsibility in a cournot–bertrand comparison. Energ. Econ. 2022; 107: 105846. doi:10.1016/j.eneco.2022.105846.

26. Eichner T, Pethig R. Kantians defy the economists’ mantra of uniform pigovian emissions taxes. Ecol. Econ. 2022; 200:107514. doi:10.1016/j.ecolecon.2022.107514

27. Fullerton D. Environmental levies and distortionary taxation: comment. Am. Econ. Rev. 1997; 87(1):245–251.

28. Metcalf GE. Environmental levies and distortionary taxation: pigou, taxation and pollution. J. Public Econ. 2003; 87(2): 313–322. doi:10.1016/S0047-2727(01)00116-5.

29. Khastar M, Aslani A, Nejati M. How does carbon tax affect social welfare and emission reduction in Finland? Energy Rep. 2020;6: 736–744. doi:10.1016/j. egyr.2020.03.001.

30. Pato' Z, Mezo}si A, Szabo' L. Is border carbon adjustment the right tool for the power sector? Clim. Policy. 2022; 22(4):502–513. doi:10.1080/14693062.2022.2043819.

31. Liu W, Liu M, Liu T, et al. Does a recycling carbon tax with technological progress in clean electricity drive the green economy? IJERPH. 2022; 19(3):1708. doi:10. 3390/ijerph19031708.

32 Liu J, Bai J, Deng Y, et al. Impact of energy structure on carbon emission and economy of China in the scenario of carbon taxation. Sci Total Environ. 2021; 762:143093. doi:10.1016/j.scitotenv.2020.143093.

33. Overland I, Sabyrbekov R. Know your opponent: which countries might fight the european carbon border adjustment mechanism? Energ Policy. 2022; 169:113175. doi:10.1016/j.enpol.2022.113175.

34. Gibbons R. An introduction to applicable game theory. J. Econ. Perspect. 1997; 11(1):127–149. doi:10. 1257/jep.11.1.127.

35. Zhou Y, Fang W, Li M, et al. Exploring the impacts of a low-carbon policy instrument: a case of carbon tax on transportation in China. Resour. Conserv. Recy. 2018; 139:307–314. doi:10.1016/j.resconrec.2018.08.015.

36. Lin B, Jia Z. Supply control vs. demand control: why is resource tax more effective than carbon tax in reducing emissions? Humanit. Soc. Sci. Commun. 2020;7:74. doi:10.1057/s41599-020-00569-w.

37. Jia Z, Wen S, Liu Y. China’s urban-rural inequality caused by carbon neutrality: a perspective from carbon footprint and decomposed social welfare. Energ. Econ. 2022; 113:106193. doi:10.1016/j.eneco. 2022.106193