Carbon dioxide emissions taxes and their economic impacts

Imposing the air pollution emissions taxes is generally recognized as one of the most both effective and economically efficient environmental policies for reducing carbon dioxide (CO2) emissions. However, due to the factors of the costs, the taxes may reflect the different impacts among different industrial sectors, particularly, when factor mobility is imperfect in the short run. This paper presents the impacts on GDP, on energy demand, on emissions and the relationship among the industrial sectors, through imposing the CO2 emissions taxes as an instrument of the environmental policies in a simplified general equilibrium framework. The necessary conditions of the environmental policy measures such as polluter pays principle (PPP) and the government financial subsidies are also discussed and evaluated.