Global Warming and Border Carbon Adjustments

Sungwan Hong, Seung Gyu Sim, Ayako Obashi, Yoshitaka Tsuruta

Research output: Contribution to journalArticlepeer-review

Abstract

This study examines the welfare implications of allowing border carbon adjustments (BCAs) in a globalized economy characterized by international trade and cross-border pollution (CBP). The model predicts that adopting BCAs is a weakly dominant strategy and global welfare is maximized when at least one country adopts BCAs in the presence of CBP, such as global warming. This is because adopting BCAs induces other countries to raise their domestic emission tax rates without concerns such as the excessive shrinkage of domestic production and aggravation of CBP.

Original languageEnglish
Pages (from-to)195-208
Number of pages14
JournalAsian Journal of Law and Economics
Volume13
Issue number2
DOIs
Publication statusPublished - 2022 Aug 1
Externally publishedYes

Keywords

  • border carbon adjustment
  • cross-border pollution
  • international trade

ASJC Scopus subject areas

  • Economics, Econometrics and Finance (miscellaneous)
  • Law

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