Climate Policy and Border Measures: The Case of the US Aluminum Industry

In this paper, analysis is presented relating to the impact of border measures for climate policy on the problem of carbon leakage, and the related issue of competitiveness in the US aluminum industry, which can be characterized as oligopolistic. Specifically, it is shown that an appropriate border measure depends on the nature of competition in aluminum production, as well as the basis for assessing the trade neutrality of any border measure. If trade neutrality is defined in terms of market volume, even though carbon leakage is reduced, US aluminum producer competitiveness cannot be maintained. This compares to defining trade neutrality in terms of market share, which results in US aluminum producer competitiveness being maintained and global carbon emissions being reduced. In either case, US users of aluminum incur deadweight losses.


Issue Date:
2014-05
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/169544
Total Pages:
37
JEL Codes:
H87; Q38
Series Statement:
Paper #5081




 Record created 2017-04-01, last modified 2017-04-26

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