Endogenising emission taxes: A general equilibrium type optimisation model applied for Turkey

TitleEndogenising emission taxes: A general equilibrium type optimisation model applied for Turkey
Publication TypeJournal Article
Year of Publication2001
AuthorsArıkan, Y., and G. Kumbaroğlu
JournalEnergy Policy
Volume29
Pagination1045-1056
ISSN0301-4215
KeywordsEmission taxation, Endogenous pollution abatement, Energy–economy modelling
Abstract

This paper presents a modelling attempt to endogenise the level and timing of environmental taxes within an optimisation framework. First, a base model of energy–economy–environmental interactions is extended to allow for exogenous tax analysis. Two types of environmental taxes, one on the sulphur content of fuels and the other on the level of emissions, are exogenously included in the model as alternative instruments to mitigate pollution. Next, the base model is modified to endogenise pollution abatement. This has been achieved by incorporating a preference rate, depending on an index of emissions, into the utility function. Finally, the emission index and emission tax are taken as substitutes and modelled within a CES form to endogenise the emission tax. Results for all cases, obtained with Turkish data, are discussed. It is found that a tax on SO2 emissions is more effective in reducing SO2 emissions than a tax applied on the sulphur content of fuels. It is also found that a gradually increasing tax is more effective in reducing emissions than a constant tax.

URLhttps://www.sciencedirect.com/science/article/pii/S0301421501000325
DOI10.1016/S0301-4215(01)00032-5