Thursday, February 12, 2015

Impacts of the carbon tax

Another nice paper posted online recently uses micro-level data from England to look at the impact of a carbon tax. The authors find that taxed firms use less energy, but don't change their employment levels, don't lose revenue (though no doubt the cost increases mean less profit), and don't exit the industry. In other words, plant owners may take a bit of a hit, but it's not enough of a hit to force them to cut back in production in any significant way.

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