Targeted Carbon Tax Reforms

Date: 08 February 2018

We show that in the presence of intersectoral linkages targeted sectoral carbon taxes might be a more effective way of reducing emissions than economy-wide carbon pricing. A carbon tax imposed on all sectors unambiguously reduces aggregate emissions, but taxes targeted at the set of key sectors can lead to the greatest emissions reduction. Due to intersectoral linkages and a tax rebate effect, taxing non-key sectors dampens the reduction in aggregate emissions. A key sector typically not only produces a lot of emissions, but also has a large influence on emissions in the rest of the economy. We focus on incremental changes in carbon taxes—carbon tax reforms—to characterise the set of key sectors analytically.

Alexander Teytelboym Bassel Tarbush Maia King

Economics of Sustainability

Economics of Sustainability

Targeted Carbon Tax Reforms


Type: paper

King, M., Tarbush, B. & Teytelboym, A. (2018). 'Targeted Carbon Tax Reforms'. Available at SSRN: https://ssrn.com/abstract=


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