Emission reduction policy: A regional economic analysis for China

Research output: Contribution to journalArticle

12 Citations (Scopus)

Abstract

© 2015 Elsevier B.V. China is under considerable pressure to reduce its CO2 emissions and has given a public commitment to substantial cuts by 2020. Policy makers are acutely aware of the possible adverse economic consequences of such cuts, and an important part of this issue is the regional dimension-will policy to reduce emissions exacerbate the already large inter-regional disparities in China, and if so, will some policies be better than others? These issues have received relatively little attention in the literature. We contribute to a better understanding of these issues by exploring the regional economic effects of two sets of policies by which emissions might be reduced: a reduction in the number of permits under a tradable permit system and a subsidy to pollution abatement. We do this in a small two-region theoretical model designed to capture some of the salient features of the Chinese economy and the Chinese tax/expenditure system. We show that there are important regional implications of a national pollution reduction policy and that the preferred policy depends on how disparities are measured, on how the revenue from the sale of permits is spent and on how a subsidy is financed.
Original languageEnglish
Pages (from-to)136-152
JournalEconomic Modelling
Volume51
DOIs
Publication statusPublished - 2015

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China
Regional economics
Emission reduction
Economic analysis
Subsidies
Politicians
Tax expenditures
Economic consequences
Chinese economy
CO2 emissions
Economic effect
Regional disparities
Pollution
Revenue
Tradable permits
Pollution abatement

Cite this

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title = "Emission reduction policy: A regional economic analysis for China",
abstract = "{\circledC} 2015 Elsevier B.V. China is under considerable pressure to reduce its CO2 emissions and has given a public commitment to substantial cuts by 2020. Policy makers are acutely aware of the possible adverse economic consequences of such cuts, and an important part of this issue is the regional dimension-will policy to reduce emissions exacerbate the already large inter-regional disparities in China, and if so, will some policies be better than others? These issues have received relatively little attention in the literature. We contribute to a better understanding of these issues by exploring the regional economic effects of two sets of policies by which emissions might be reduced: a reduction in the number of permits under a tradable permit system and a subsidy to pollution abatement. We do this in a small two-region theoretical model designed to capture some of the salient features of the Chinese economy and the Chinese tax/expenditure system. We show that there are important regional implications of a national pollution reduction policy and that the preferred policy depends on how disparities are measured, on how the revenue from the sale of permits is spent and on how a subsidy is financed.",
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Emission reduction policy: A regional economic analysis for China. / Chen, A.; Groenewold, Nicolaas.

In: Economic Modelling, Vol. 51, 2015, p. 136-152.

Research output: Contribution to journalArticle

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AU - Chen, A.

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PY - 2015

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N2 - © 2015 Elsevier B.V. China is under considerable pressure to reduce its CO2 emissions and has given a public commitment to substantial cuts by 2020. Policy makers are acutely aware of the possible adverse economic consequences of such cuts, and an important part of this issue is the regional dimension-will policy to reduce emissions exacerbate the already large inter-regional disparities in China, and if so, will some policies be better than others? These issues have received relatively little attention in the literature. We contribute to a better understanding of these issues by exploring the regional economic effects of two sets of policies by which emissions might be reduced: a reduction in the number of permits under a tradable permit system and a subsidy to pollution abatement. We do this in a small two-region theoretical model designed to capture some of the salient features of the Chinese economy and the Chinese tax/expenditure system. We show that there are important regional implications of a national pollution reduction policy and that the preferred policy depends on how disparities are measured, on how the revenue from the sale of permits is spent and on how a subsidy is financed.

AB - © 2015 Elsevier B.V. China is under considerable pressure to reduce its CO2 emissions and has given a public commitment to substantial cuts by 2020. Policy makers are acutely aware of the possible adverse economic consequences of such cuts, and an important part of this issue is the regional dimension-will policy to reduce emissions exacerbate the already large inter-regional disparities in China, and if so, will some policies be better than others? These issues have received relatively little attention in the literature. We contribute to a better understanding of these issues by exploring the regional economic effects of two sets of policies by which emissions might be reduced: a reduction in the number of permits under a tradable permit system and a subsidy to pollution abatement. We do this in a small two-region theoretical model designed to capture some of the salient features of the Chinese economy and the Chinese tax/expenditure system. We show that there are important regional implications of a national pollution reduction policy and that the preferred policy depends on how disparities are measured, on how the revenue from the sale of permits is spent and on how a subsidy is financed.

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