Cited by 44Climate Change Policy and EconomicsEnergy, Environment, Economic GrowthEnergy, Environment, and Transportation Policies

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The Role of Trade and Competitiveness Measures in US Climate Policy

Fischer, Carolyn, Fox, Alan K·2011·American Economic Review

Abstract

We review the proposed measures for addressing competitiveness and carbon leakage concerns in recent US climate policy legislation. For eligible energy-intensive, trade-exposed sectors, output-based rebates would initially dampen cost increases; later, border adjustments would ensure that imports face comparable cost burdens. Both measures can in theory enhance the economic efficiency of carbon reduction efforts, but both pose some interesting economic and practical trade-offs. This paper discusses our recent research into the welfare and carbon leakage effects of using output-based allocation and trade measures in conjunction with climate policies.

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Crossref · 10.1257/aer.101.3.258

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  • The major downside of output-based free allocation is that it severely weakens incentives for efficient domestic production.

    “The major downside of this approach is that it severely weakens incentives for efficient domestic production.”

    From Carbon Leakage, Consumption, and Trade (2022) · cites this paper as [85]

  • Without carbon costs reflected in material prices, output-based allocation negates any economic incentive for efficient material use and thus raises the overall cost for any given goal.

    “As illustrated in Figure 6 , although producers have incentives to make incremental carbon efficiency improvements to meet the benchmark, without carbon costs reflected in material prices, output-based allocation negates any economic incentive for efficient material use (85) and thus raises the overall cost for any given goal.”

    From Carbon Leakage, Consumption, and Trade (2022) · cites this paper as [85]

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References 5 · Cited by 44

Research works printed but not linked: 2

  1. 10.1016/j.reseneeco.2006.07.001 · DOI
  2. 10.1016/j.reseneeco.2010.04.011 · DOI

Metadata

Authors
Fischer, C., & Fox, A. K.
Affiliations
  • Resources For The Future (US)
  • United States International Trade Commission (US)
Venue
American Economic Review
Published
2011-05-01
Volume
101
Issue
3
Pages
258-262
ISSN
0002-8282 (ISSN-L)
OpenAlex
W2057303285
Cited by
44
References
5
Citations by year
2025: 2 · 2024: 1 · 2023: 2 · 2022: 6 · 2021: 5 · 2020: 2 · 2019: 4 · 2018: 1 · 2017: 3 · 2016: 3 · 2015: 3 · 2014: 4 · 2013: 3 · 2012: 5
FWCI
9.74
Type
journal article
Language
en
Open access
closed
Locations
  • American Economic Review (publishedVersion)
  • VU Research Portal (publishedVersion)
  • RePEc: Research Papers in Economics (submittedVersion)
  • Data Archiving and Networked Services (DANS) (submittedVersion)
Topics
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Climate Change Policy and Economics
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Energy, Environment, Economic Growth
  • Physical Sciences › Energy › Renewable Energy, Sustainability and the Environment › Energy, Environment, and Transportation Policies
Keywords
United States climate policy, carbon leakage, competitiveness, border adjustment, carbon pricing, welfare effects, trade policy

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