Subglobal climate change policies and the international trading system: A computable general equilibrium perspective

This thesis provides an assessment of the economic effects of policies intended to reduce anthropogenic carbon dioxide emissions. The contribution of this work is to provide a better understanding of the connection between subglobal abatement policies and the international trading system. The first chapter summarizes the policy issues and identifies the thesis's additions to the global-warming economic literature.; Chapter Two provides a general game-theoretic exposition on the global trade-environment interface. The analysis conjectures the scope for free riding in the current global environment problems to be quite significant to the extent that even limited self-enforcing agreements may not be forthcoming. Instead, environmental cooperation is promoted within a connected trade-environment game, in which global trade interaction provides the enforcement mechanism.; Chapter Three describes the data set and presents the static version of the general equilibrium framework adopted for the numerical analysis in the thesis.; Chapter Four provides numerical assessment of welfare costs, incentives, and subgame-perfection in a sub-global carbon-abatement coalition, guided by the policy initiatives in The United Nation Framework Convention on Climate Change (FCCC), the Berlin Mandate, and the Kyoto Accord. In addition, self-financed schemes for expanding such a coalition are characterized and explored. The empirical framework used for the simulation exercises is a 26-region, 13-commodity static computable general equilibrium (CGE) model of the world economy, in which regional preferences are extended to include benefits from reducing global warming.; Chapter Five studies the competitive effects resulting from a unilateral CO{dollar}sb2{dollar} cutback in OECD. Carbon leakage and trade embodied-carbon are measured and assessed for different representations of international trade in crude oil and energy-intensive goods. Competitiveness of energy-based industries, as well as the scope for and the consequences of OECD taking countervailing border measures to curb carbon leakage are discussed and evaluated.; Chapter Six assesses the spatial repercussions of the subglobal abatement action on the world distribution of production and trade in energy-intensive goods. An oligopolistic structure combined with increasing returns to scale technologies is embedded within the multi-regional general equilibrium framework to characterize these locational effects.; Chapter Seven focuses on the implications of international capital mobility. A dynamic version of the general equilibrium model is developed and used to assess the leverage of international capital controls on the competitive effects associated with the subglobal abatement action. The final chapter provides concluding remarks and directions for future research.