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Following introductions from Cheryl Boone Isaacs, president of the Academy of Motion Pictures Arts and Sciences, and the Los Angeles mayor, Eric Garcetti (he referred to Wang his "friend"), Wang launched into his company's plans to offer a 40% production rebate for foreign and local films and television shows at his huge new film studio in eastern China (expected to cost $8.2bn and open in 2017).
It appears that the domestic production rebate (BAP) and export border adjustment (BAE) have a modest cushioning effect (i.e., GDP and employment reduction is less than in NBA).
We consider four border adjustments: border adjustments on imports based on domestic emissions; border adjustments on exports via a rebate for exports; a domestic production rebate; and full border adjustment on both exports and imports.
In particular, four BAMs are evaluated using the CGE model: (1) border adjustment on exports; (2) border adjustment on imports; (3) border adjustment through production rebate (subsidy) to all domestic producers; and (4) full border adjustment (both exports and imports).
Fischer and Fox (2009) compared the effects of four BAMs (a border tax on imports, a border rebate for exports, full border adjustment and a domestic production rebate) in a setting of a unilateral emissions pricing scheme for the USA and Canada.
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Domestic production rebates were preferred to other alternatives.
On the other hand, export and production rebates ease the decrease in exports to some degree, making output reductions slightly smaller than in NBA.
A closer observation of the impact of BAMs on emission reduction reveals that export and production rebates work against the environmental objectives of the carbon pricing.
CGE models have been used over the last decade to establish the economic and environmental effectiveness of adopting different BAMs such as export rebates, carbon or 'green' tariffs, production rebates and forcing importers to surrender carbon allowances in a cap-and-trade system.
Even though the original border adjustment policies were not designed for improving welfare but to sustain the competitiveness of domestic EITE industries while limiting the carbon leakage, results reported in Table 3 demonstrate that export rebates (BAE) and production rebates (BAP) can improve the welfare impact of carbon mitigation.
New Mexico officials boast of having used a 25percentt production cost rebate to build a local film industry that has attracted more than $600 million in direct spending since 2003, and an estimated $1.8 billion in total financial impact, as of last June.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com