TheEffect of Production- Versus Consumption-Based Emission Tax under Demand Uncertainty

Emission tax;Green technology;Operations management;Emission abatement;Sustainability;Industrial and operations engineering;Industrial engineering, College of Engineering and Computer Science

Ren, JieChen, Yubao ;

University of Michigan

关键词: Emission tax;    Green technology;    Operations management;    Emission abatement;    Sustainability;    Industrial and operations engineering;    Industrial engineering, College of Engineering and Computer Science;   

Others  :  https://deepblue.lib.umich.edu/bitstream/handle/2027.42/140735/Final_49698122_Jie%20Ren%27s%20Graduate%20Thesis.pdf?sequence=1&isAllowed=y

瑞士|英语

来源: The Illinois Digital Environment for Access to Learning and Scholarship

【 摘 要 】

Emission tax is an instrument widely adopted by countries and regions to incentivize emission abatement by emission-intensive manufacturers. However, policies differ in the methods using which emissions are accounted for. For example, the Chile emission tax direct penalizes manufacturers for the emissions they generate duringtheir production (production-based emission tax), whereas the Sweden electricity emission tax penalizes the consumption of electricity rather than its production (consumption-based emission tax).The two differing methods have potentially varying implications on manufacturers, their emission abatement decisions, as well as the resulting emission levels, especially when demand uncertainty is involved. In this thesis, I investigate the impact of the two distinct methods by studying a profit-maximizing manufacturer facing stochastic demand. Under either both production-and consumption-based emission tax, the manufacturer’s optimal decisions on its product price, production quantity and emission abatement investment are derived. Interestingly, it is shown that under either tax, an increase in the emission tax can discourage the manufacturer from investing in emission abatement in some cases. The impact of tax rate, abatement technology efficiency and demand uncertainty on the manufacturer’s profitability and abatement decision are also studied. Perhaps surprisingly, higher demand uncertainty may motivate the manufacturer to invest in emission abatement. A case study based on a real-world electricity power generator is provided at the end. Using the case study, I offer further insights into the comparison between the two taxes and find that there exist cases for either tax to dominate the other in terms of both profit and emissions.