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

Liu, XingÖrebro universitet,Handelshögskolan vid Örebro Universitet (författare)

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.

Bohlin, LarsÖrebro universitet,Handelshögskolan vid Örebro Universitet(Swepub:oru)lasn (författare)
Örebro universitetHandelshögskolan vid Örebro Universitet (creator_code:org_t)

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