On the Choice of Tax Base to Reduce Greenhouse Gas Emissions in the Context of Electricity Generation

Fraser, R. (2006) On the Choice of Tax Base to Reduce Greenhouse Gas Emissions in the Context of Electricity Generation. In: 50th Annual Conference of the Australian Agricultural and Resource Economics Society, 8-10 February 2006, Sydney, Australia. (Unpublished) (The full text of this publication is not available from this repository)

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Abstract

This paper analyses the role of uncertain demand in determining the government’s choice between an ad valorem and a specific base for its tax to reduce greenhouse gas emissions in the electricity generating sector. Using a model of optimal capacity choice for a pricetaking firm facing demand uncertainty it is shown that an ad valorem tax is more effective in reducing emissions than its equivalent specific tax, although this benefit comes at the cost of lower reliability of electricity supply. A numerical analysis provides a robust finding that the ad valorem tax is expected to generate greater tax revenue, thereby providing support for the choice of this tax base in situations where the extra tax revenue can be used to compensate consumers for reduced reliability of supply.

Item Type: Conference or workshop item (Paper)
Subjects: H Social Sciences > HD Industries. Land use. Labor
Divisions: Faculties > Social Sciences > Kent Business School
Depositing User: Robert Fraser
Date Deposited: 17 Sep 2008 10:36
Last Modified: 14 Jan 2010 14:20
Resource URI: http://kar.kent.ac.uk/id/eprint/5189 (The current URI for this page, for reference purposes)
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