The impact of consistent internalization of the external effects of transport and manufacturing : a CGE analysis of Sweden

• This paper uses a static, small open economy computable General Equilibrium (CGE) model of the Swedish economy to study the impact of the consistent internalization of external effects from transport and manufacturing. We look at eight policy scenarios: first, fully implemented Social Marginal Cost Pricing (SMCP)in industry, sea and air transport, road transport,  and rail transport and then SMCP in these sectors separately or in various combinations. We evaluate the effects on, among other things, national and global emissions reductions, GDP, government budget, transport demand, and overall social welfare. The simulation results show that among the eight policy scenarios that we study, correcting prices only for rail transport generates a negative social welfare surplus, the smallest possible emissions reduction effects, and relatively low government revenue. While correcting prices only for road transport generates much larger effects across all aspects, it also increases transport demand on the already congested rail network. Combining rail and road charges generates a relatively high welfare effect, high government revenue, and high emissions reductions.

Ämnesord

SAMHÄLLSVETENSKAP  -- Ekonomi och näringsliv (hsv//swe)

SOCIAL SCIENCES  -- Economics and Business (hsv//eng)

Nyckelord

Social marginal cost

externalities

transport taxation

CO2 taxation

carbon leakage

general equilibrium

Företagsekonomi

Business Studies

Publikations- och innehållstyp

vet (ämneskategori)

ovr (ämneskategori)