Addressing the concerns about carbon leakage in the implementation of carbon pricing policies: a focus on the issue of competitiveness

This article investigates whether the implementation of asymmetric carbon pricing policies leads to carbon leakage. We first present the theoretical mechanisms behind carbon leakage. Secondly, we conduct a review of the existing empirical results of carbon leakage. We focus on the competitiveness ch...

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Bibliographic Details
Published in:Economia e politica industriale 2021-03, Vol.48 (1), p.53-75
Main Authors: Rey, Florian, Madiès, Thierry
Format: Article
Language:English
Subjects:
Business Strategy/Leadership
Carbon
Economics
Economics and Finance
Entrepreneurship
Industrial economics
Industrial Organization
Pricing policies
R & D/Technology Policy
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Summary:This article investigates whether the implementation of asymmetric carbon pricing policies leads to carbon leakage. We first present the theoretical mechanisms behind carbon leakage. Secondly, we conduct a review of the existing empirical results of carbon leakage. We focus on the competitiveness channel and therefore rely on papers analysing the effects of asymmetric carbon prices on both trade and investment flows. Lastly, we discuss solutions to reduce carbon leakage, so that acceptability towards ambitious carbon pricing policies can be maximized.
ISSN:0391-2078
1972-4977
DOI:10.1007/s40812-020-00157-8