Emissions and Taxation: Is Chaotic CO₂ Concentration Controllable?

抄録

This paper demonstrates that an adjustment process of the global carbon tax rate can be chaotic. To this end, a discrete-time dynamic game is constructed in which the environmental regulator updates the tax rate for given observation of the regulated industry's CO₂ emissions. It is shown that if the regulator considers the marginal benefit of increasing the tax rate is high, the adjustment process becomes chaotic. It is also demonstrated that the atmospheric CO₂ concentration level with chaotic emission is higher than the level with a stationary state of “high tax and low emissions.” Given that the regulator wishes to control the concentration level with low emission, an adaptive adjustment of the tax rate is investigated.