ID | 116989 |
Title Proper | Carbon taxation and market structure |
Other Title Information | a CGE analysis for Russia |
Language | ENG |
Author | Orlov, Anton ; Grethe, Harald |
Publication | 2012. |
Summary / Abstract (Note) | Russia is one of the world's major sources of carbon based energy as well as one its most intensive users. Introducing carbon taxes can lead to a reduction in emissions and encourage investment in energy efficiency. We investigate the economic effects of carbon taxes on the Russian economy under perfect competition and a Cournot oligopoly in output markets. The main findings are: (i) substituting carbon taxes for labour taxes can yield a strong double dividend in Russia; however, welfare gains strongly depend on the labour supply elasticity and elasticities of substitution between capital, labour, and energy. (ii) Under the assumption of a Cournot oligopoly with homogenous products and symmetric firms in the markets for natural gas, petroleum and chemical products, metals, and minerals, welfare costs of the environmental tax reform can be higher than under perfect competition. This is because introducing carbon taxes leads to a reduction in already sub-optimal output, thereby exacerbating pre-existing distortions arising from imperfect competition. (iii) Furthermore, increases in energy costs can result in higher mark-ups in some markets because of less competition resulting from firms' exit. |
`In' analytical Note | Energy Policy Vol. 51; Dec 2012: p.696-707 |
Journal Source | Energy Policy Vol. 51; Dec 2012: p.696-707 |
Key Words | Russia ; Imperfect Competition ; Double Dividend |