TY - JOUR
T1 - Is Environmental Tax Harmonization Desirable in Global Value Chains?
AU - Cheng, Haitao
AU - Kato, Hayato
AU - Obashi, Ayako
N1 - Funding Information:
We wish to thank the anonymous referee and the editor Till Requate for their valuable suggestions. Our thanks also go to seminar and conference participants at the Joint Seminar of the JSIE Chubu and Kansai (Nanzan U), Keio U., the Annual Meeting of the JSIE (Kwansei Gakuin U) and the IIPF 2019 (U. of Glasgow) for their helpful comments. Financial supports from the JSPS (JP16J01228; JP19K13693; JP99K13693) and the Hasegawa International Scholarship Foundation are gratefully acknowledged.
Publisher Copyright:
© 2020 Haitao Cheng, et al., published by De Gruyter, Berlin/Boston 2020.
PY - 2021/1/1
Y1 - 2021/1/1
N2 - The spatial unbundling of parts production and assembly currently characterizes globalization, leading to the worldwide dispersion of pollution. We consider socially optimal (cooperative) environmental taxes in a two-country model of global value chains in which the location of both parts and assembly can differ. When unbundling costs are so high that parts and assembly must colocate in the pre-globalized world, pollution is spatially concentrated, and harmonizing environmental taxes maximizes global welfare. In contrast, with low unbundling costs triggering the dispersion of parts and thus pollution throughout the world as today, harmonization fails to maximize global welfare. Similar results hold when the two countries non-cooperatively choose their environmental taxes.
AB - The spatial unbundling of parts production and assembly currently characterizes globalization, leading to the worldwide dispersion of pollution. We consider socially optimal (cooperative) environmental taxes in a two-country model of global value chains in which the location of both parts and assembly can differ. When unbundling costs are so high that parts and assembly must colocate in the pre-globalized world, pollution is spatially concentrated, and harmonizing environmental taxes maximizes global welfare. In contrast, with low unbundling costs triggering the dispersion of parts and thus pollution throughout the world as today, harmonization fails to maximize global welfare. Similar results hold when the two countries non-cooperatively choose their environmental taxes.
KW - emission tax competition
KW - environmental policy
KW - fragmentation
KW - international coordination
KW - trade in parts and components
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U2 - 10.1515/bejeap-2019-0346
DO - 10.1515/bejeap-2019-0346
M3 - Article
AN - SCOPUS:85094168042
SN - 1935-1682
VL - 21
SP - 379
EP - 416
JO - B.E. Journal of Economic Analysis and Policy
JF - B.E. Journal of Economic Analysis and Policy
IS - 1
ER -