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Carbon Policy and the Structure of Global Trade

Author

Listed:
  • Edward J. Balistreri

    (Colorado School of Mines - Division of Economics and Business)

  • Christoph Boehringer

    (University of Oldenburg)

  • Thomas F. Rutherford

    (University of Wisconsin - Madison)

Abstract

Alternative perspectives on the structure of international trade have important implications for the evaluation of climate policy. In this paper we assess climate policy in the context of three important alternative trade formulations. First is a Heckscher‐Ohlin model based on trade in homogeneous products, which establishes the traditional neoclassical view on comparative advantage. Second is an Armington model based on regionally differentiated goods, which constitutes a popular specification for numerical simulations of trade policy. Third is a Melitz model based on monopolistic‐competition and firm heterogeneity. This heterogeneous‐firms framework is adopted in many contemporary theoretic and empirical investigations in international trade. As we show in this paper, the three alternative trade formulations have important implications for the assessment of climate policy with respect to competitive effects for energy‐intensive production (and hence carbon leakage) as well as the transmission of policy burdens across countries.

Suggested Citation

  • Edward J. Balistreri & Christoph Boehringer & Thomas F. Rutherford, 2015. "Carbon Policy and the Structure of Global Trade," ZenTra Working Papers in Transnational Studies 57 / 2015, ZenTra - Center for Transnational Studies, revised Oct 2015.
  • Handle: RePEc:zen:wpaper:57
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    References listed on IDEAS

    as
    1. Edward J. Balistreri & Ayed Al-Qahtani & Carol A. Dahl, 2010. "Oil and Petroleum Product Armington Elasticities: A New-Geography-of-Trade Approach to Estimation," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 167-180.
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    Cited by:

    1. Vrontisi, Zoi & Charalampidis, Ioannis & Paroussos, Leonidas, 2020. "What are the impacts of climate policies on trade? A quantified assessment of the Paris Agreement for the G20 economies," Energy Policy, Elsevier, vol. 139(C).
    2. Christoph Boehringer & Sonja Peterson & Thomas F. Rutherford & Jan Schneider & Malte Winkler, 2021. "Climate Policies after Paris: Pledge, Trade and Recycle Insights from the 36th Energy Modeling Forum Study (EMF36)," Working Papers V-434-21, University of Oldenburg, Department of Economics, revised May 2021.
    3. Wang, Xiaoxi & Dietrich, Jan P. & Lotze-Campen, Hermann & Biewald, Anne & Stevanović, Miodrag & Bodirsky, Benjamin L. & Brümmer, Bernhard & Popp, Alexander, 2020. "Beyond land-use intensity: Assessing future global crop productivity growth under different socioeconomic pathways," Technological Forecasting and Social Change, Elsevier, vol. 160(C).
    4. George David Banks & Timothy Fitzgerald, 2020. "A sectoral approach allows an artful merger of climate and trade policy," Climatic Change, Springer, vol. 162(2), pages 165-173, September.
    5. Edward J. Balistreri & Christoph Böhringer & Thomas F. Rutherford, 2018. "Quantifying Disruptive Trade Policies," CESifo Working Paper Series 7382, CESifo.

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    More about this item

    Keywords

    Heterogeneous firms; carbon leakage; competitiveness;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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