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Crago, Christine Lasco; Khanna, Madhu. |
A carbon tax would penalize carbon intensive fuels like gasoline and shift fuel consumption to less carbon intensive alternatives like biofuels. Since biofuel production competes for land with agriculture, a carbon tax could raise land rents, divert land towards fuel production, and raise agricultural prices. This paper analyzes the welfare effect of a carbon tax on fuel with gasoline and biofuel as available fuel choices, in the presence of a labor tax and biofuel subsidy. The second-best optimal carbon tax is also quantified. Findings show that when biofuels is part of the fuel mix, the carbon tax has a commodity price effect which arises from tax-induced changes in land rent. The commodity price effect could exacerbate or attenuate the tax interaction... |
Tipo: Conference Paper or Presentation |
Palavras-chave: Carbon tax; Optimal fuel tax; Biofuel; Environmental Economics and Policy; Q42; Q48; Q54; H23. |
Ano: 2010 |
URL: http://purl.umn.edu/60894 |
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