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The regional economic effects of a reduction in carbon emissions and an evaluation of offsetting policies in C hina
Author(s) -
Chen Anping,
Groenewold Nicolaas
Publication year - 2014
Publication title -
papers in regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.937
H-Index - 64
eISSN - 1435-5957
pISSN - 1056-8190
DOI - 10.1111/pirs.12024
Subject(s) - welfare economics , china , economics , welfare , economy , political science , market economy , law
C hina has promised large cuts in CO 2 emissions by 2020, which is likely to have differential effects across regions. We know little about the regional effects of pollution reduction. We make a contribution to filling this gap using a small theoretical model with two regions, features of the C hinese economy and the right to emit CO 2 as a factor of production. We find regionally differentiated effects on income, welfare and output and explore government policies designed to reduce these effects. The effects of fiscal policies depend crucially on whether one or both regions respond and on whether output or welfare is targeted. Boosts to productive capacity do better in terms of output but not welfare.