Carbon leakage revisited: unilateral climate policy with directed technical change
The increase in carbondioxide emissions by some countries in reaction to an emission reduction by countries with climate policy (carbon leakage) is seen as a serious threat to unilateral climate policy.Using a two-country model where only one of the countries enforces an exogenous cap on emissions, this paper analyzes the effect of technical change that can be directed towards the clean or dirty input, on carbon leakage.We show that, as long as technical change cannot be directed, there will always be carbon leakage through the standard terms-of-trade effect.However, once we allow for directed technical change, a counterbalancing induced technology effect arises and carbon leakage will generally be lower.Moreover, we show that when the relative demand for energy is sufficiently elastic, carbon leakage may be negative: the technology effect induces the unconstrained region to voluntarily reduce its own emissions.
(This abstract was borrowed from another version of this item.)
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 39 (2008)
Issue (Month): 2 (February)
|Contact details of provider:|| Web page: http://www.springerlink.com/link.asp?id=100263|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Richard G. Newell & Adam B. Jaffe & Robert N. Stavins, 1998.
"The Induced Innovation Hypothesis and Energy-Saving Technological Change,"
NBER Working Papers
6437, National Bureau of Economic Research, Inc.
- Richard G. Newell & Adam B. Jaffe & Robert N. Stavins, 1999. "The Induced Innovation Hypothesis and Energy-Saving Technological Change," The Quarterly Journal of Economics, Oxford University Press, vol. 114(3), pages 941-975.
- Stavins, Robert & Jaffe, Adam & Newell, Richard, 1998. "The Induced Innovation Hypothesis and Energy-Saving Technological Change," Discussion Papers dp-98-12-rev, Resources For the Future.
- Daron Acemoglu, 2002.
"Directed Technical Change,"
Review of Economic Studies,
Oxford University Press, vol. 69(4), pages 781-809.
- Gately, D. & Huntington, H.G., 2001.
"The Asymmetric Effects of Changes in Price and Income on Energy and Oil Demand,"
01-01, C.V. Starr Center for Applied Economics, New York University.
- Dermot Gately & Hiliard G. Huntington, 2002. "The Asymmetric Effects of Changes in Price and Income on Energy and Oil Demand," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 19-55.
- Jean-Marc Burniaux & Joaquim Oliveira Martins, 2000. "Carbon Emission Leakages: A General Equilibrium View," OECD Economics Department Working Papers 242, OECD Publishing.
- Pindyck, Robert S & Rotemberg, Julio J, 1983. "Dynamic Factor Demands and the Effects of Energy Price Shocks," American Economic Review, American Economic Association, vol. 73(5), pages 1066-79, December.
- David Popp, 2002. "Induced Innovation and Energy Prices," American Economic Review, American Economic Association, vol. 92(1), pages 160-180, March.
- Golombek Rolf & Hoel Michael, 2004. "Unilateral Emission Reductions and Cross-Country Technology Spillovers," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 3(2), pages 1-27, September.
- Di Maria Corrado & Smulders Sjak A., 2005. "Trade Pessimists vs Technology Optimists: Induced Technical Change and Pollution Havens," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 3(2), pages 1-27, January.
- Copeland, Brian R. & Taylor, M. Scott, 2005.
"Free trade and global warming: a trade theory view of the Kyoto protocol,"
Journal of Environmental Economics and Management,
Elsevier, vol. 49(2), pages 205-234, March.
- Brian R. Copeland & M. Scott Taylor, 2000. "Free Trade and Global Warming: A Trade Theory View of the Kyoto Protocol," NBER Working Papers 7657, National Bureau of Economic Research, Inc.
- Copeland,B.R. & Taylor,M.S., 2000. "Free trade and global warming : a trade theory view of the Kyoto protocol," Working papers 4, Wisconsin Madison - Social Systems.
- Carraro, Carlo & Siniscalco, Domenico, 1998. "International Institutions and Environmental Policy: International environmental agreements: Incentives and political economy1," European Economic Review, Elsevier, vol. 42(3-5), pages 561-572, May.
- Daron Acemoglu, 2007.
"Equilibrium Bias of Technology,"
Econometric Society, vol. 75(5), pages 1371-1409, 09.
- Hoel, M., 1989.
"Global Environmental Problems: The Effects Of Unilateral Actions Taken By One Country,"
11/1989, Oslo University, Department of Economics.
- Hoel, Michael, 1991. "Global environmental problems: The effects of unilateral actions taken by one country," Journal of Environmental Economics and Management, Elsevier, vol. 20(1), pages 55-70, January.
- Michael Grubb & Chapuis Thierry & Minh Ha-Duong, 1995.
"The economics of changing course: implications of adaptability and inertia for optimal climate policy,"
- Grubb, Michael & Chapuis, Thierry & Duong, Minh Ha, 1995. "The economics of changing course : Implications of adaptability and inertia for optimal climate policy," Energy Policy, Elsevier, vol. 23(4-5), pages 417-431.
- Bates, Robin W. & Moore, Edwin A., 1992. "Commercial energy efficiency and the environment," Policy Research Working Paper Series 972, The World Bank.
- Werner Antweiler & Brian R. Copeland & M. Scott Taylor, 2001.
"Is Free Trade Good for the Environment?,"
American Economic Review,
American Economic Association, vol. 91(4), pages 877-908, September.
- Barrett, Scott, 1994. "Self-Enforcing International Environmental Agreements," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 878-94, Supplemen.
- Babiker, Mustafa H., 2005. "Climate change policy, market structure, and carbon leakage," Journal of International Economics, Elsevier, vol. 65(2), pages 421-445, March.
- Popp, David C., 2001. "The effect of new technology on energy consumption," Resource and Energy Economics, Elsevier, vol. 23(3), pages 215-239, July.
When requesting a correction, please mention this item's handle: RePEc:kap:enreec:v:39:y:2008:i:2:p:55-74. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)or (Rebekah McClure)
If references are entirely missing, you can add them using this form.