The Influence Of Carbon Tariff On Exports, Domestic Carbon Tax And National Welfare

Carbon pollution problem has become the focus of international trade a nd domestic environmental policies. As a typical and new carbon rule, scholars have conducted intensive research on carbon tariff before implementation. In the context of the above, this paper reviews the related literature and research. The duopoly model proposed in this paper considers two firms producing a homogeneous good and located in t wo countries, referred to as developing and developed. Besides, the carbon tariff parameter and environmental damage cost are added to the model. Parametric values inside the set [0,1] are used to represent the extents of the carbon tariff parameter. Under symmetric cost, the simultaneous change of environmental damage costs in both countries influences the quantity, tax and welfare separately. While, under asymmetric cost, the simultaneous change of carbon tariff and environmental damage cost influences the quantity, tax and welfare. Finally, numerical simulation is conducted to yield the optimal carbon tariff parameter, maximizing the tax and the welfare in developed countries. The result is that, the higher the damage cost and productive cost are, the more likely the country will implement carbon tariff to protect the competiveness of domestic firms and reduce carbon leakage. O n the contrary, implementation of high carbon tariff means huge loss of we lfare in developing countries,the upcoming carbon tariff will be great challenge to developing countries.