In search of redistribution‐effective carbon tax regime

This paper runs extensive numerical experiments to find the global redistribution‐effective carbon tax regime. We discuss two broad categories of schemes, namely, the bottom‐up type constant‐rate and top‐down type constant‐revenue ones. On a comparable basis, we compare these two broad categories of schemes using the notion of elasticity. We conclude that, in both the bottom‐up and top‐down paradigms, progressive schemes has the largest redistribution effects in terms of reducing global inequality. Exemption has a V‐shaped pattern in equalizing. We recommend a constant‐revenue type carbon tax with small amount of emissions exemption for every country as the most pro‐poor scheme.