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The Endogenous Change in Shipping Speed When Emissions From Maritime Shipping Are Taxed – A Short Note

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Document pages: 3 pages

Abstract: This short note presents a simple model in which firms choose the speed at which they do maritime shipping of goods. The literature review by Mundaca and Strand (2020) suggests that no study on the impact of carbon taxes on maritime shipping has so far taken into account the endogenous choice of vessel speed. The simple results presented at the end of this note suggest that it might be tractable to extend existing models to take endogenous speed choice into account. In fact, I will show that the model predicts that per percentage point of ad valorem tax on the shipping fuel, all ships speed will decrease by about 0.33 , leading it to reduce shipping fuel consumption by about 0.66 .

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