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Negative Leakage
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DOI：10.1086/676449.png)
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Abstract
En 中文
Our analytical general equilibrium model solves for effects of a small increase in carbon tax on leakage-the increase in emissions elsewhere. Identical consumers buy two goods using income from endowments that are mobile between sectors. Usually an increase in one sector's tax raises output price, so consumption shifts to the other good, causing positive leakage. Here, we find a new negative effect not recognized in existing literature: the taxed sector substitutes away from carbon into clean inputs, so it may absorb resources, shrink the other sector, and reduce their emissions. This abatement resource effect could offset some or all of the positive effect. We show that this effect can substantially affect estimates of leakage and is robust to model extensions.
Keywords:
Cap and trade
Carbon tax
Climate change
Climate policy
Emissions abatement
Factor mobility
Global warming
International trade
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