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Arthur A, van Benthem ; Daniel, Spiro ; Gustav, Engstrom ; Johan, Gars ; Niko, Jaakkola ; Daniel, Spiro ; Niko, Jaakkola ; Therese, Lindahl. (2020) What Policies Address Both the Coronavirus Crisis and the Climate Crisis?.
In: CESifo Working Paper Series. RePEc:ces:ceswps:_8367.
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Another concern could be that carbon taxes could lead to relocation of production to areas with laxer environmental standards—the pollution haven effect. The evidence for this channel is mixed (Eskeland and Harrison, 2002; List et al., 2004). In the long run, whereby input mixes are more flexible, increased carbon taxes most probably shift production towards other inputs such as labor. We conclude that the direct effect of a carbon tax on the coronavirus crisis is ambiguous. Most importantly, however, this is no longer the case if the carbon-tax reform is revenue neutral.
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