Affiliation:
1. Department of Public Finance Feng Chia University Taichung Taiwan
2. Department of Business Management National Sun Yat‐Sen University Kaohsiung Taiwan
3. Department of Public Affairs and Civic Education National Changhua University of Education Changhua Taiwan
Abstract
AbstractThis paper compares different environmental policies under free‐trade and carbon tariffs. Our findings are as follows. First, taxes and standards of exporting countries become laxer under carbon tariffs than free trade. Next, if an importing country adopts free trade, its welfare is relatively lower (higher) under taxes when the marginal pollution damage is smaller (greater). Conversely, if an importing country implements a carbon tariff policy, its welfare is relatively higher under taxes. Last, the importing country's free‐trade (carbon tariff) policy leads the exporting country to have lower (higher) welfare under taxes than standards.