The effect of fossil energy and other environmental taxes on profit incentives for change in an open economy: Evidence from the UK

Authors: Webster, A. and Ayatakshi, S.

Journal: Energy Policy

ISSN: 0301-4215

DOI: 10.1016/j.enpol.2013.05.016

Abstract:

This paper argues that the underlying supply and demand analysis of fossil energy and other environmental taxes needs further elaboration when a country (a) introduces national fossil energy or environmental taxes and (b) is open to international trade at given world prices. We provide evidence that such conditions are plausible for many sectors in the UK. A key implication is that the short run effects of such taxes should not be felt in final good prices, since these are determined in world markets, but in terms of underlying profitability. These changes in underlying profits provide two key incentives for producers-to change to more environmentally friendly production techniques and to switch resources to production of less environmentally harmful goods. Using input-output techniques we provide evidence for the UK to show how existing fossil energy and other "green" taxes have affected underlying profitability. The evidence shows quite strong profit incentives to shift resources from a small number of energy intensive industries to others. © 2013 Elsevier Ltd. All rights reserved.

Source: Scopus

The effect of fossil energy and other environmental taxes on profit incentives for change in an open economy: Evidence from the UK

Authors: Webster, A. and Ayatakshi, S.

Journal: ENERGY POLICY

Volume: 61

Pages: 1422-1431

eISSN: 1873-6777

ISSN: 0301-4215

DOI: 10.1016/j.enpol.2013.05.016

Source: Web of Science (Lite)

"The Effect of Fossil Energy and Other Environmental Taxes on Profit Incentives for Change in an Open Economy: Evidence from the UK"

Authors: Webster, A. and Ayatakshi, S.

Editors: Jefferson, M.

Journal: Energy Policy

Abstract:

This paper argues that the underlying supply and demand analysis of fossil energy and other environmental taxes needs further elaboration when a country (a) introduces national fossil energy or environmental taxes and (b) is open to international trade at given world prices. We provide evidence that such conditions are plausible for many sectors in the UK. A key implication is that the short run effects of such taxes should not be felt in final good prices, since these are determined in world markets, but in terms of underlying profitability.

These changes in underlying profits provide two key incentives for producers - to change to more environmentally friendly production techniques and to switch resources to production of less environmentally harmful goods. Using input-output techniques we provide evidence for the UK to show how existing fossil energy and other "green" taxes have affected underlying profitability. The evidence shows quite strong profit incentives to shift resources from a small number of energy intensive industries to others.

Source: Manual

Preferred by: Allan Webster and Sukanya Ayatakshi Endow