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Share of polluting input as a sufficient statistic for burden sharing

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  • Zhang, Da
  • Peng, Hantang
  • Zhang, Lin
Abstract
By investigating the general equilibrium effects with theoretical analysis and computational experiments, we observe that the value share of polluting input is a sufficient statistic for the welfare incidence of a quantity-based policy in a competitive economy for short-term and commonly implemented mitigation policy. This result is robust with respect to the sectoral, regional disaggregation and consumer preference. In contrast, with a given pollution tax, the imputed welfare incidence could vary under economies with different production technologies and consumer preferences. The quantity-based policy instrument leads to a more explicit welfare incidence than the price instrument. On this basis, outcome-based criteria used in pollution reduction burden sharing across regions can simply choose the value share of polluting input as a reference base for allocation.

Suggested Citation

  • Zhang, Da & Peng, Hantang & Zhang, Lin, 2023. "Share of polluting input as a sufficient statistic for burden sharing," Energy Economics, Elsevier, vol. 121(C).
    • Handle: RePEc:eee:eneeco:v:121:y:2023:i:c:s0140988323001457
    DOI: 10.1016/j.eneco.2023.106647
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    More about this item

    Keywords

    Burden sharing; Polluting input intensity; Price and quantity; General equilibrium;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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