TITLE:
Border Carbon Adjustment and China’s Optimal Environmental Tax: A Theoretical Analysis Based on Oligopoly Competition Model
AUTHORS:
Hongjin Xiang, Jiale Wang, Yanxiang Kuang
KEYWORDS:
Border Carbon Adjustment, Cournot Model, Optimal Environmental Tax, China
JOURNAL NAME:
Theoretical Economics Letters,
Vol.13 No.5,
October
10,
2023
ABSTRACT: A two-stage game model was established against the backdrop of border
carbon adjustment imposed by foreign countries, with a focus on exploring the
impact of border carbon adjustment imposed by foreign countries on the output
and profits of domestic export enterprises. Besides, the decision on the
optimal environmental tax in China under border carbon adjustments was further
discussed. This article argues that the imposition of border carbon adjustment
by foreign countries will reduce the balanced export volume and export profits
of domestic export enterprises, while also increasing the profits of foreign
enterprises; the decision on the optimal domestic environmental tax depends on
the tax rate of border carbon adjustment imposed by foreign countries. The higher
the border carbon adjustment rate imposed by foreign countries on our country,
the higher the optimal domestic environmental tax rate in
China. The lower the border carbon adjustment rate imposed by foreign
countries on our country, the lower the optimal domestic environmental tax rate
in China. Based on these conclusions, relevant policy recommendations were
proposed.