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SIM, Seung-Gyu
Department Aoyama Gakuin University Department of International Economics, School of International Politics, Economics and Communication Position Professor |
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| Language | English |
| Publication Date | 2018/02 |
| Type | Academic Journal |
| Peer Review | Peer reviewed |
| Title | Inelastic Supply of Fossil Energy and Competing Environmental Regulatory Policies |
| Contribution Type | Collaboration |
| Journal | Sustainability |
| Journal Type | Another Country |
| Publisher | MDPI |
| Volume, Issue, Page | 10(2) |
| Author and coauthor | Sungwan Hong and Seung-Gyu Sim |
| Details | The inelastic supply of fossil energy in the international input market precipitates failure of Pigouvian taxation consequent to competition among governments, as imposition of an environmental tax increases (decreases) the marginal cost of domestic (foreign) firms. This paper demonstrates that unless the supply of fossil energy is perfectly elastic, cap-and-trade outperforms Pigouvian taxation in terms of the domestic welfare of adopting countries, and global welfare is maximized when all countries implement the alternative scheme. We further demonstrate that the linkage of permit markets, when the energy supply is sufficiently inelastic, improves global welfare. |