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American Economic Review: Vol. 101 No. 3 (May 2011)

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The Role of Trade and Competitiveness Measures in US Climate Policy

Article Citation

Fischer, Carolyn, and Alan K. Fox. 2011. "The Role of Trade and Competitiveness Measures in US Climate Policy." American Economic Review, 101(3): 258-62.

DOI: 10.1257/aer.101.3.258

Abstract

We review the proposed measures for addressing competitiveness and carbon leakage concerns in recent US climate policy legislation. For eligible energy-intensive, trade-exposed sectors, output-based rebates would initially dampen cost increases; later, border adjustments would ensure that imports face comparable cost burdens. Both measures can in theory enhance the economic efficiency of carbon reduction efforts, but both pose some interesting economic and practical trade-offs. This paper discusses our recent research into the welfare and carbon leakage effects of using output-based allocation and trade measures in conjunction with climate policies.

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Authors

Fischer, Carolyn (Resources for the Future, Washington, DC)
Fox, Alan K. (US International Trade Commission)

JEL Classifications

Q54: Climate; Natural Disasters; Global Warming
Q58: Environmental Economics: Government Policy


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