should a carbon tax be differentiated across sectors abstract if some but not all countries are cooperating to reduce co2 emissions one could make the following argument a high carbon tax for carbon intensive tradeable sectors in the cooperating countries will reduce the production of goods from these sectors and therefore co2 emissions in the cooperating countries however this will to a large extent be counteracted by increased production of such goods in the countries that have no climate policy and since it is only total co2 emissions from all countries that are relevant for the climate there is no point in a policy that simply relocates co2 emissions from the cooperating countries to the countries that have no climate policy according to this line of reasoning carbon intensive tradeable sectors should thus face a lower carbon tax than other sectors of the economy this paper shows that a carbon tax should not be differentiated across sectors in the economy provided one can use import and export tariffs on all traded goods it is also shown that such a differentiation of carbon taxes is optimal for the cooperating countries if they are prevented from using tariffs on the traded goods however informational or political factors constraining the use of tariffs are likely also to constrain the possibility of differentiating carbon taxes between sectors

a note on the optimal tariff retaliation and the welfare loss from tariff wars in a framework with intraindustry trade abstract this paper uses krugman s 1980 model of trade with product differentiation and monopolistic competition to examine the effects of a uniform ad valorem tariff the main results are there exists an optimal tariff even for a small economy and the optimal tariff rate is an increasing function of the size of the economy and the degree of production differentiation under reasonable parameter assumptions a tariff war between two countries of equal size in which each country retaliates by imposing its own optimal tariff causes a welfare loss equivalent to a drop in income of about 4 percent

lessons from the polder energy tax design in the netherlands from a climate change perspective this paper evaluates energy tax reform in the netherlands between 1988 and 2002 from a climate change perspective in particular the introduction of two indirect taxes on energy products is now responsible for a considerable amount of tax revenue from a green tax base the paper discusses the energy tax base and rate structure from a modern pigovian tax perspective and illustrates the practical difficulties involved in the indirect and non uniform taxation of emissions also further improvements of the energy tax structure are discussed such as a better targeting of the energy tax base and tax rate to fuel characteristics

do big countries win tariff wars yes it is widely believed that tariffs invite retaliation and that the postretaliation equilibrium l eaves all countries worse off than they would be at free trade the a uthors present a simple pure exchange model with two countries and t wo goods and show which endowment patterns are consistent with this belief they find that if one country is substantially bigger than th e other it can expect to gain from a tariff war despite retaliation the model can be extended to show that the advantage obtained by bei ng part of a large trading unit can help explain the formation of cus toms unions copyright 1988 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

endogenous timing in games of commercial policy this paper analyzes various equilibria associated with intervention in trade in the context of noncooperative policy games with endogenous timing it is shown that while the subgame perfect equilibria in quota games always involve sequential play that is not necessarily the case in tariff games one implication of the analysis is that in contrast to existing theory trade is not eliminated in quota games another implication is that quotas are not necessarily inferior to tariffs the paper also examines the ways policy leaders and followers differ in their preferences over instruments and allows the choice over instruments to be determined endogenously this paper analyses various equilibria associated with intervention in trade in the context on non cooperative policy games with endogenous timing it is shown that while the subgame perfect equilibria in quota games always involve sequential play that is not necessarily the case in tariff games one implication of the analysis is that in contrast to existing theory trade is not eliminated in quota games another implication is that quotas are not necessarily inferior to tariffs the paper also examines the ways policy leaders and followers differ in their preferences over instruments and allows the choice over instruments to be determined endogenously

the gains from agricultural research under distorted trade abstract this paper explores the gains from research issue within the framework of a product which is traded with the aid of export subsidies because of the taxpayer burden associated with increased exports it is quite possible for the returns to research to be negative a decline in the rate of protection through a rising world market leads to a linear increase in the gains from research while a rise in the internal support price will cause a non linear and negative response if the supply shift is pivotal and a linear and negative response if it is parallel finally global returns to research will be higher than individual country returns and will always be positive in a free trade environment

alternative designs for tariffs on embodied carbon a global cost effectiveness analysis in the absence of effective world wide cooperation to curb global warming import tariffs on embodied carbon have been proposed as a potential supplement to unilateral emissions pricing we consider alternative designs for such tariffs and analyze their effects on global welfare within a multi region multi sector computable general equilibrium cge model of global trade and energy our analysis suggests that the most cost efficient policy could be region specific tariffs on all products based on direct plus electricity emissions in the end however the potential cost savings through carbon tariffs must be weighed against the administrative costs as well as legal issues and political considerations

measures to enhance the effectiveness of international climate agreements the case of border carbon adjustments abstract actions on climate change which are not supported by all countries are not very effective however full participation in a global climate treaty with meaningful emission reductions is difficult to achieve the non excludability of the public good mitigation provides an incentive to abstain from global action moreover carbon leakage renders it unattractive to join a treaty without full participation we study whether and under which conditions border carbon adjustments bcas can mitigate free riding and reduce carbon leakage in a simple strategic trade model we show that bcas can lead to large stable climate agreements including full participation associated with large global welfare gains if treaties do not restrict membership open membership as this is typical for environmental agreements we caution against restricting accession to treaties exclusive membership as this is typical for trade agreements which may serve individual but not global interests

the private sector in agricultural research systems will it fill the gap abstract this article examines whether the private sector can fill the gap of declining public research in developing countries economic theory suggests private for profit research will focus on areas where returns to research are appropriable and reasonable profits are generated actual private for profit research activities concentrate on countries and industries with large markets appropriable returns strong science infrastructure and favorable government policies governments and donors can promote private research by easing constraints to private entry and operations but if governments stop funding research on public goods and technologies with limited market potential the private sector is unlikely to fill the gap completely

optimal tariff equilibria with customs unions the authors construct a model of customs unions in which countries charge optimal tariffs customs unions internalize the externality that exists whenever two countries import the same good also customs unions make several countries into one large unit with more market power big customs unions can improve their members welfare relative to the free trade the authors model of customs unions separates the effects of tariff reduction from the effects of policy coordination the movement from nash equilibrium to a free trade association improves global resource allocations moving from a free trade association to a full customs union has ambiguous resource allocation effects

trade imbalance and the endogenous optimal tariff endogenous tariff literatures reveal empirically that trade imbalance is negatively related with import tariff this article gives a theoretical evidence and explanation to support this finding wit

strategy and control in supplier distributor relationships an agency perspective this paper examines the influence of competitive strategy on the relationship between suppliers and their distribution networks drawing on agency theory hypotheses are developed specifying the appropriate match between manufacturer strategies and systems of control within distribution channels cluster analysis is used to show distinct differences in channel management and structure for the three generic strategies of cost leadership differentiation and focus results suggest that variation in control relationships may be explained by the demands posed by manufacturers competitive strategies this study therefore extends the applicability of porter s typology to the specific structure of distribution channels and shows that agency theory can provide insights into the economic basis of interorganizational relationships

how robust is the uniform emissions pricing rule to social equity concerns abstract this paper examines pollution tax differentiation across industries in light of social equity concerns using theoretical and numerical general equilibrium analyses in an optimal tax framework we characterize the drivers for non uniform optimal taxes stemming from the interaction of household heterogeneity with social preferences quantitatively assessing the case of price based co2 emissions control in the u s economy we find that uniform emissions pricing is approximately optimal when social concerns are defined over inequity induced by the environmental tax the deviation from uniform emissions pricing however becomes non negligible when pollution tax rebates deviate much from optimal transfer schemes or when social concerns are defined over both policy induced impacts and inequity unrelated to environmental policy our results are robust to a number of model extensions including the stringency of the environmental target downstream vs upstream taxation pre existing distortionary taxes and parametric uncertainty in firms and households equilibrium tax responses

would protectionism defuse global imbalances and spur economic activity a scenario analysis abstract in the evolving debate and analysis of global imbalances a commonly overlooked issue pertains to rising protectionism this paper attempts to fill that gap examining the macroeconomic implications of trade policy changes through the lens of a dynamic general equilibrium model of the world economy encompassing four regional blocs simulation exercises are carried out to consider the imposition of uniform and discriminatory tariffs on trading partners as well as the case of tariff retaliation we also discuss a scenario in which a globalization backlash lowers the degree of competition in import competing sectors and compare the implications of higher markups in the product and labor markets

efficient climate policy with internationally mobile firms a major concern in the design of an incomplete climate agreement is thatfirms that use fossil fuels intensively may respond to emission regulationsby relocating their plants from cooperating to non cooperating countries this paper analyses how the cooperating countries might deal with the issueof firm delocation through emission taxes trade provisions and alocalisation subsidy to mobile firms it is shown that firms should not beinduced to stay in the cooperating countries by lowering emission taxesbelow the pigouvian tax rate incentives to stay should be given partlythrough trade provisions and partly through a localisation subsidy a secondbest solution without localisation subsidies is also discussed in thatcase the efficient emission tax is lower than the pigouvian tax rate finally the paper discusses the implications of the first best and thesecond best policy regimes for the pattern of firm localisation

designing an emissions trading scheme for china an up to date climate policy assessment abstract we assess recent chinese climate policy proposals in a multi region multi sector computable general equilibrium model with a chinese carbon emissions trading scheme ets when the emissions intensity per gdp in 2020 is required to be 45 lower than in 2005 the model simulations indicate that the climate policy induced welfare loss in 2020 measured as the level of gdp and welfare in 2020 under climate policy relative to their level under business as usual bau in the same year is about 1 the chinese welfare loss in 2020 slightly increases in the chinese rate of economic growth in 2020 when keeping the emissions target fixed at the 2020 level after 2020 in absolute terms the welfare loss will reach about 2 in 2030 if china s annual economic growth rate is 0 5 percentage points higher lower the climate policy induced welfare loss in 2030 will rise decline by about 0 5 percentage points full auctioning of carbon allowances results in very similar macroeconomic effects as free allocation but full auctioning leads to higher reductions in output than free allocation for ets sectors linking the chinese to the european ets and restricting the transfer volume to one third of the eu s reduction effort creates at best a small benefit for china yet with smaller sectoral output reductions than auctioning these results highlight the importance of designing the chinese ets wisely

coordinating climate and trade policies pareto efficiency and the role of border tax adjustments abstract this paper explores the role of trade instruments in globally efficient climate policies focusing on whether or not some form of border tax adjustment bta is warranted when carbon prices differ internationally the analysis shows that while there is no case for bta when all instruments can be freely deployed pareto efficiency does require a form of bta when carbon taxes in some countries are constrained its purpose then is to partly counteract the impact on emissions of inappropriate carbon pricing there or equivalently to undo the trade distortions such pricing creates the required form of bta is generally complex but a special case is identified in which it optimally has the simple structure envisaged in practical policy discussions it is also shown that the efficiency case for bta depends critically on whether climate policies are pursued by carbon taxation or by cap and trade

policy implications of agricultural biotechnology biotechnology promises to have a greater impact on society than any other presently foreseeable technological development the development of biotechnology in the words of one anonymous industry official is a true scientific revolution and will have the same kind of major economic impacts on society as synthetic chemicals and quantum mechanics has had agricultural production stands to realize one of the largest effects of this new technology for example kalter et al find that the bovine growth hormone bgh could increase dairy herd production by as much as 40 with this magnitude of effects on an industry that is already heavily regulated a number of policy issues require consideration other policy issues arise because of the ability of biotechnology to develop new products rapidly with specific characteristics desired by the investor another set of policy issues involve environmental concerns because of potential irreversible damage to the environment by new organisms versus the loss of economic benefits from investment caused by licensing delays finally major trade policy considerations arise because of the potential to replace trade in agricultural products by trade in biotechnical inputs this paper defines and illuminates these four sets of policy considerations the primary concern of this paper is with the characteristics of biotechnology that make policy considerations different from those of previous technological changes

the role of public policy in optimizing renewable energy development in the greater southern appalachian mountains abstract this research presents a third component of a comprehensive decision support system for energy planning that allows for combining existing electricity generating capabilities with increased use of renewable energy sources it focuses on energy planning at the regional level and concentrates specifically on the greater southern appalachian mountains of the eastern united states a region that was chosen for analysis not only due to its heavy dependence on coal for electricity but also because of its potential for increased use of wind and solar power previous research used a geographic information system gis model for identifying renewable energy potential to provide input data for a multi objective linear programming molp model to determine the optimal constrained mix of renewable energy sources and existing fossil fuel facilities by balancing annual generation costs against the corresponding greenhouse gas emissions this new component of the system analyzes three potential public policies renewable portfolio standard carbon tax and renewable energy production tax credit that have been used to foster increased renewable energy usage these policies require minor modifications to the molp model for implementation the results of these policy cases were then analyzed to determine the impact that these policies have on generation cost and pollution emissions within the region

climate policy instruments and industry effects and potential responses in the swedish context efficient policy instruments for reducing the emission of greenhouse gases are essential for the realization of a successful climate policy general economic policy instruments have the potential for providing efficient emission reduction as they equalise marginal costs for emission reduction between different actors they also provide incentives for a great variety of responses such as energy efficiency improvements fuel substitution and reduced consumption of carbon intensive products however as a result of the fact that it has so far been impossible to implement policy instruments on a global scale these instruments are often adapted in such a way that some of their potential advantages are eliminated in this paper the possibility of different policy instruments to contribute to reductions in industrial co2 emissions while preserving the competitiveness of industry is evaluated theoretically the consequences of increasing the cost of co2 emission in various industrial sectors are also discussed attention is directed towards carbon taxes emission trading and regulation co2 taxes without tax reductions and emission trading with allocation through auctioning have theoretical advantages in a global climate regime but may lead to significant disadvantages if implemented in a single or a small groups of countries emission trading with free intensity based allocation would in this case have a major advantage in combining incentives for emission reductions through efficiency improvements and fuel substitution with little impact on production levels less

persistent underinvestment in public agricultural research abstract it is often argued that public support of agricultural research is inadequate however the empirical papers that support this hypothesis rarely reflect formal behavioral theory capable of explaining this phenomenon this paper presents a theory that explains underfunding namely that funding agencies respond too slowly to secular changes in the value of research a model of farmer and funding agency behavior is presented and shown to imply that actual research funding will be consistently smaller than optimal funding the assumptions and results of the model are explained in terms of the institutional literature on public agricultural research agencies

can tariffs be used to enforce paris climate commitments we evaluate the potential of border carbon adjustments bcas and strategic tariffs to compel noncompliant countries to meet emission reduction targets pledged under the paris climate agreement our analysis employs a numerical economy wide model with energy sector detail and given recent actions by the us administration considers bcas on us exports we find that when the us does not restrict emissions and faces bcas on its exports us welfare losses are smaller than when the us meets its paris commitments hence bcas are preferable for the us and cannot be used to enforce paris climate commitments the use of strategic tariffs on the contrary would result in a trade war and a larger welfare decrease in us welfare than when it meets its paris commitments strategic tariffs also decrease welfare in countries that meet their paris pledges accordingly strategic tariffs which are much higher than bca rates can be used to enforce paris climate commitments if compliant countries are willing to incur welfare losses to punish non compliant countries

public and private returns from joint venture research an example from agriculture public research institutions are turning increasingly to the private sector for additional financial support such a trend in the short run lessens the need for public research expenditures but may in the long run prove to be very costly to the economy as a whole this is because private funding increases the chance that the direction of research will shift so that private benefits are enhanced such a shift is especially costly if public research funds are then not forthcoming that would have the potential of producing the maximum level of benefits to the economy as a whole a case study of canadian barley research is used to illustrate this problem

energy tariffs in a small open economy abstract tariffs on imported energy alter production and redistribute income the present paper examines a small open economy producing two traded goods with capital labor and imported energy a tariff reduces import and domestic factor income but payment to one domestic factor rises energy intensive output falls but the other output may rise in the general equilibrium political opinions on the tariff would differ revenue is concave in the tariff suggesting that the government might set the tariff to maximize revenue a simulation illustrates these general equilibrium properties across a range of tariffs

emissions leakage environmental policy and trade frictions abstract we develop a two good general equilibrium model of a small open economy to decompose the effect of a country s unilateral strengthening of environmental policy on pollution emissions in the rest of the world known as emissions leakage we show analytically and numerically that the level of emissions leakage depends on the level of trade friction in the service sector in the model production in the manufacturing sector is associated with pollution emissions and production in the service sector is clean in a special case with free trade in manufacturing and no trade in services no leakage occurs allowing for trade in services we solve for the relationship between trade frictions in the service sector and leakage at lower levels of service sector s trade friction leakage from a small strengthening of environmental regulation decreases increases if services are imported exported finally we simulate the model calibrating the to the canadian economy to compare these effects relative sizes over a range of plausible parameter values leakage is about 18 lower when using trade friction levels estimated from the literature rather than assuming no trade friction in services

fair optimal or detrimental environmental vs strategic use of border carbon adjustment abstract we carry out a detailed sensitivity analysis of border carbon adjustment rates by applying a global computable general equilibrium cge gtap7 based model we find different incentives for the regions in the climate coalition to raise carbon based border tax rates btax above the standard rate that mimics an equalisation of carbon prices across regions herein the strategic use of btax the manipulation of the terms of trade is stronger for all coalition regions than the environmental use the reduction of carbon emissions abroad higher btax can reduce carbon leakage but with a declining marginal effect furthermore we find different incentives for regions outside the coalition to oppose high btax rates russia and the other energy exporters would oppose it while the low income countries would not because of benefits from the trade diversion effect thus btax encourages the former to join the coalition while compensating transfers are necessary to encourage the other developing countries including china and india

a simple rule for assessing tariff and tax incidence abstract this paper demonstrates that with constant elasticities the marginal burden that arises from a tariff increase by the home country is shared equally between the home and foreign country at a tariff rate equal to twice the optimal tariff for the home country even if elasticities are not constant this rule provides an upper bound on the size of the burden sharing tariff

optimum tariffs and retaliation how country numbers matter abstract this paper identifies a new terms of trade externality that is exercised through tariff setting a north south model of international trade is introduced in which the number of countries in each region can be varied as the number of countries in one region is increased each government there competes more aggressively with the others in its region by lowering its tariff to attract imports from the other region in doing so all countries in a region exert a negative terms of trade externality on each other collectively undermining their own terms of trade and welfare this externality can increase efficiency if the numbers of countries in both regions are increased simultaneously

does increased extraction of natural gas reduce carbon emissions without an international climate agreement extraction of more natural gas could reduce emissions of co2 as more clean natural gas may drive out dirty coal and oil using a computable equilibrium model for the western european electricity and natural gas markets we examine whether increased extraction of natural gas in norway reduces global emissions of co2 we find that both in the short run and in the long run total emissions are reduced if the additional quantity of natural gas is used in gas power production in norway if instead the additional quantity is exported directly total emissions increase both in the short run and in the long run however if modest co2 taxes are imposed increased extraction of natural gas will reduce co2 emissions also when the additional natural gas is exported directed

compensating variation consumer s surplus and welfare the compensating variation was defined by j r hicks 1942 as the amount one would have to deduct from a person s income to make him just as well off after a change in prices and income as he had been in the initial situation if the compensating variation is positive the individual is better off under the new situation since the compensating variation furnishes a uniquely defined numerical cardinal indicator of welfare improvement it provides an implicit ranking of alternative prospective situations not only relative to the initial situation but also relative to each other in practice this appears to be how this and other tools of cost benefit analysis are actually used one is interested in knowing not only whether a particular bridge or a particular excise tax will lead to an improvement in welfare but which out of a set of alternative bridges or alternative tax systems will improve welfare the most 1 in this paper we analyze conditions under which the compensating variation can be validly used in this generalized sense these turn out to be precisely the same as conditions previously derived see our 1976 paper for the valid use of consumer s surplus as a welfare measure in our final section we analyze the problem of deriving the generalized equivalent and compensating variations either exactly or approximately from observable demand functions by means of generalizations of or alternatives to consumer s surplus

optimal differentiation of international environmental taxes in the presence of national labor market distortions we explore the implication of the doubledividend debate for international environmentaltaxes in our scenario small open economies withdifferent labor market distortions follow a commonenvironmental policy and use national environmentaltax revenues to finance labor tax cuts since thedouble dividend hypothesis does not hold a high labortax implies a low environmental tax relative to othercountries the optimal differentiation ofinternational environmental taxes is proven to be afunction of the national labor tax rates and theuncompensated elasticities of labor supply

robust technology policy against emission leakage the case of upstream subsidies asymmetric regulation of a global pollutant between countries can alter the competitiveness of industries and lead to emissions leakage which hampers countries welfare in order to limit leakage governments consider supporting domestic trade exposed firms by subsidizing their investments in abatement technology the suppliers of such technologies tend to be less than perfectly competitive particularly when both emissions regulations and advanced technologies are new in this context of twin market failures we consider the relative effects and desirability of subsidies for abatement technology we find a more robust recommendation for upstream subsidies than for downstream subsidies downstream subsidies tend to increase global abatement technology prices reduce pollution abatement abroad and increase emission leakage on the contrary upstream subsidies reduce abatement technology prices and hence also emissions leakage

embodied carbon tariffs in a world where the prospects of a global agreement to control greenhouse gas emissions are bleak the idea of using trade policy as an implicit regulation of foreign emission sources has gained many supporters in countries contemplating unilateral climate policies embodied carbon tariffs tax the direct and indirect carbon emissions embodied in imported goods the appeal seems obvious as oecd countries are on average large net importers of embodied emissions from non oecd countries carbon tariffs could substantially extend the reach of oecd climate policies we investigate this claim by simulating the effects of embodied carbon tariffs with a computable general equilibrium model of global trade and energy use we find that embodied carbon tariffs do effectively reduce carbon leakage however the scope for improvements in the global cost effectiveness of unilateral climate policy is limited the main welfare effect of the tariffs is to shift the burden of oecd climate policy to the developing world

recent progress of cooperation on climate mitigation a bibliometric analysis abstract effective international cooperation is an important measure to mitigate climate change the purpose of this study is to clarify the research progress in the field of cooperation on emission reduction identify the influential authors and articles and reveal the main research topics based on the bibliometric method and the web of science database this study analyzes the literature in the field of cooperation on emission reduction the results show that the publications in this field have increased significantly over the past decade with the usa and china are the most influential countries keyword co occurrence and frequency analysis show that the most important research topics are as follows burden sharing and equity the stability of the climate coalition and international environmental agreements technology transfer and climate finance the linkage of carbon markets and the response to noncooperation behavior the main methods involved are game theory model integrated assessment models and computable general equilibrium model equitable distribution of mitigation responsibilities is the basis for cooperation on carbon reduction specific rulebooks for carbon market linkage is the key to its successful implementation this study helps researchers to clarify the current research status in the field of cooperation on emission reduction and provide valuable information for future research

energy taxation reasons for discriminating in favor of the production sector abstract if a small open economy wishes to restrict it s greenhouse gas emissions it has to decide whether to impose uniform taxes on all polluters or to resort to a discriminatory policy in practice countries tend to impose higher taxes on households and to tax the industrial sector more leniently this paper identifies conditions under which this is efficient it is shown that an efficiency maximizing tax planner discriminates in favor of the production sector if i there are restrictions on the taxation of lump sum income or if ii labor supply exerts market power

between a rock and a hard place a trade theory analysis of leakage under production and consumption based policies without a comprehensive global climate agreement carbon leakage remains a contentious issue consumption based pricing of emissions which could in practice be implemented with a full border tax adjustment bta has been forwarded as an option to increase the effectiveness of unilateral climate policy this paper questions the economic rationale behind this approach using a theoretical 2 times 2 trade model in which leakage occurs through terms of trade effects we show analytically first that consumption based pricing of emissions does not necessarily result in less leakage than production based policies second the sign of the optimal unilateral carbon tariff depends on the carbon intensity differential between the foreign country s exporting and non exporting sectors and not on the differential between home s and foreign s exporting sectors as implied by the full bta approach third based on empirical data for the year 2004 our model implies that full bta applied by the european union on e g imports from and exports to china would by shifting china s production from the export sector with a relatively low carbon intensity towards the more carbon intensive non export sector actually increase leakage

switching to carbon free production processes implications for carbon leakage and border carbon adjustment climate policy under partial global compliance raises concerns regarding carbon leakage while border carbon adjustment bca measures are a potential remedy they have also been criticised on various grounds this paper therefore investigates whether a policy fostering the switch to carbon free technologies can substitute for bcas a reason for the effectiveness of a targeted technology policy is that major leakage prone sectors such as iron and steel have two main sources of carbon emissions combustion of fossil fuels and industrial processes while combustion emissions can be reduced relatively easy by increasing energy efficiency reducing process emissions requires a switch to low carbon production processes e g in steel production by deploying electrolysis based on large scale solar electricity we show by means of a multi regional computable general equilibrium analysis that such a switch in steel production technology can eliminate a significant fraction of carbon leakage and also increase sectoral output and welfare since the necessary technologies are not available at large scale yet however are likely to be by 2020 a transitional bca scheme may be a crucial supportive instrument to foster such technology switches yet in the long run bca should be phased out to preserve the incentive for carbon free innovation

us trade wars in the twenty first century with emerging countries make america and its partners lose again in a context of rising protectionist rhetoric this paper looks at the potential impact of trade wars initiated by a change in us trade policies we use a static multicountry multisector general equilibrium model to evaluate six modalities of three potential trade wars for a total of 18 scenarios between the usa and china between the usa and mexico and a combination of the two previous conflicts in each case we evaluate various forms of trade retaliation by the us partner s the same level of import duty as the one imposed by the usa an import duty that minimises welfare loss a duty that minimises terms of trade deterioration a duty that generates the same amount of collected revenue and finally a nash equilibrium we conclude that there is no scenario in which the us government augments its domestic welfare or gdp there may be sectoral gains in value added in the usa but they are small and to the detriment of other sectors while losses for china are relatively small potential losses for the mexican economy are significant there are also free riders of these trade wars finally the way in which trade retaliations are designed matters greatly

the rate of return to public sector agricultural r d in the uk 1965 80 1989 the rate of return to public sector agricultural r d in the uk 1965 80 applied economics vol 21 no 8 pp 1063 1086

the gatt and gradualism abstract this paper shows how the institutional rules imposed on its signatories by the gatt created a strategic incentive for countries to liberalize gradually trade liberalization must be gradual and free trade can never be achieved if punishment for deviation from an agreement is limited to a withdrawal of equivalent concessions and if initial deviation from an agreement is also limited the paper shows how sufficiently patient countries have an incentive to deviate in a limited way when operating under gatt dispute settlement procedures

energy taxes in the netherlands what are the dividends in this paper the environmental and economic effects of the introduction of a unilateral energy tax in the netherlands are analysed using an applied general equilibrium age model the effects of a small user energy tax and a general energy tax are compared while taking into account different tax recycling mechanisms the model contains a great level of detail with respect to emissions and environmental indicators greenhouse effect acidification eutrophication and waste which is helpful for assessing environmental quality the results show that the introduction of a small environmental tax reform not only improves the environment but also raises non environmental welfare which is due to an improvement of the efficiency of the tax structure

consumer s surplus without apology the purpose of this paper is to settle the controversy surrounding consumer s surplus and by so doing to validate its use as a tool of welfare economics i will show that observed consumer s surplus can be rigorously utilized to estimate the unobservable compensating and equivalent variations the correct theoretical measures of the welfare impact of changes in prices and income on an individual i derive precise upper and lower bounds on the percentage errors of approximating the compensating and equivalent variations with consumer s surplus these bounds can be explicitly calculated from observable demand data and it is clear that in most applications the error of approximation will be very small in fact the error will often be overshadowed by the errors involved in estimating the demand curve the results in no way depend upon arguments about the constancy of the marginal utility of income consequently this paper supplies specific empirical criteria which can replace the apologetic caveats frequently employed by those who presently apply consumer s surplus moreover the results imply that consumer s surplus is usually a very good approximation to the appropriate welfare measures to preview below i establish the validity of these rules of thumb for a

border adjustment for european emissions trading competitiveness and carbon leakage unilateral or sub global policies to combat climate change are potentially sensitive to free riding and carbon leakage one way of dealing with carbon leakage and competitiveness is the imposition of border adjustment measures for competing imports for example in the form of the obligation to importers of goods to purchase and surrender emissions allowances to the authorities when importing in this paper we explore some implications of border adjustment measures in the eu ets for sectors that might be subject to carbon leakage we examine the implications of two variants of these measures on the competitiveness of these sectors and on the global environment with the help of a multi sector multi region computable general equilibrium cge model of the global economy our calculations suggest that border adjustment might reduce the sectoral rate of leakage of the iron and steel industry rather forcefully but that the reduction would be less for the mineral products sector including cement the reduction of the overall or macro rate of leakage would be modest so from an environmental point of view border tax adjustments would not be a very effective policy measure but might mainly be justified by considerations of sectoral competitiveness

carbon leakage the green paradox and perfect future markets policies of lowering carbon demand may aggravate instead of alleviate climate change green paradox in a two period three country general equilibrium model with finite endowment of fossil fuel one country enforces an emissions cap in the first or second periods when that cap is tightened the extent of carbon leakage depends on the interaction of various parameters and elasticities conditions for the green paradox are specified all determinants of carbon leakage resulting from tightening the first period cap work in the opposite direction when the second period cap is tightened tightening the second period cap does not necessarily lead to the green paradox

the eu decarbonisation roadmap 2050 what way to walk we carry out a detailed cge computable general equilibrium analysis of the eu decarbonisation roadmap 2050 on a macroeconomic and on a sectoral level herein we study a reference scenario that implements existing eu policies as well as 3 unilateral and 3 global climate action scenarios we identify global climate action with international emissions trading and the full equalization of co2 prices across all eu sectors as a reasonable policy option to avoid additional costs of the decarbonisation roadmap to a large extent this policy option may include cdm clean development mechanism in the sense of where flexibility in an extended form if there are countries without emissions caps moreover we identify diverse sectoral effects in terms of output investment emissions and international competitiveness we conclude that the successful realization of the eu decarbonisation roadmap probably requires a wise and joint consideration of technology policy design and sectoral aspects

the organization of agricultural research in western developed countries abstract this paper reviews agricultural research structural and organizational changes in western developed countries examines new financing prospects for agricultural research and provides some tentative conclusions about which organizations are best positioned to provide services for the twenty first century given that these countries face many similar economic political scientific and agroclimatic factors and fiscal issues we can expect a set of similar new developments that have potentially important and widespread long run implications after three common developments are outlined principles of impure public good financing are applied leading to the following agricultural science policy recommendations i new political jurisdictions should be formed to finance research e g new alliances across countries and subregions within large countries ii intellectual property rights should be strengthened to increase the total amount and share of total public and private agricultural research that is privately financed and conducted i e the private sector should find it profitable to undertake a large share of applied research but not be expected to finance public sector agricultural research and iii the public sector should redirect its research efforts increasingly to areas that are socially worthwhile but not privately undertaken e g in the basic and pretechnology areas on environmental resources food safety and human nutrition and policy finally large countries that have developed a system of shared public and private financing and performance and decentralized public support of agricultural research seem best positioned for meeting the needs of the twenty first century

nash equilibrium tariffs for the united states and canada the roles of country size scale economies and capital mobility a theoretical analysis of optimal nash equilibrium tariff rates is presented a numerical general equilibrium model is then used to find nash equilibrium tariff rates for the united states and canada the nash equilibrium tariffs are small relative to partial equilibrium estimates 18 percent for the united states and 6 percent for canada the united states is essentially indifferent between the nash equilibrium and free trade while canada is better off at the latter by 4 billion empirical results support theoretical predictions that the optimal tariff is smaller when the country is smaller there are scale economies and free entry and capital is internationally mobile

optimal export taxes in a multicountry framework abstract this paper extends the optimum export tax analysis to multicountry partial pe and general equilibrium ge frameworks using a computable general equilibrium cge model of the global cocoa market analyzing myopic optimum nash optimum and nash revenue maximizing taxes we show that optimum and revenue maximizing taxes obtained in the ge framework differ from their pe counterparts as they are determined not only by the elasticity of the residual demand curve facing the country but by domestic supply conditions as well second not only are nash revenue maximizing taxes higher than nash optimum taxes in the ge but paradoxically the society attains a higher level of welfare under nash revenue maximizing taxes than under nash optimum taxes finally we show that the frequent use of lerner symmetry lerner a p 1936 the symmetry between import and export taxes economica 11 306 313 in the policy oriented analysis of optimum export taxes is not warranted

optimum tariffs and retaliation revisited how country size matters in his seminal work on tariff retaliation johnson review of economic studies 21 1953 1954 showed that a country will win a bilateral tariff war if its relative monopoly monopsony power in world trade is sufficiently large however it is unclear from johnson s analysis and from subsequent research on the subject how this power is determined in general economic environments an important goal of this paper is to address this issue with the help of a neoclassical trade model in which country size is at centre stage it is shown that a sufficient condition for a country to prefer a non cooperative nash tariff equilibrium retaliation over free trade is that its relative size be sufficiently large the paper also refines the structure of the general trade model and generates additional characterization results on the importance of country size for best response tariff functions retaliatory tariffs and welfare

optimal environmental border adjustments under the general agreement on tariffs and trade a country choosing to adopt border carbon adjustments based on embodied emissions is motivated by both environmental and strategic incentives we argue that the strategic component is inconsistent with commitments under the general agreement on tariffs and trade gatt we extend the theory of border adjustments to neutralize the strategic incentive and consider the remaining environmental incentive in a simplified structure the theory supports border adjustments on carbon content that are below the domestic carbon price because price signals sent through border adjustments inadvertently encourage consumption of emissions intensive goods in unregulated regions the theoretic intuition is supported in our applied numeric simulations countries imposing border adjustments at the domestic carbon price will be extracting rents from unregulated regions at the expense of efficient environmental policy and consistency with international trade law

the hunt vitell general theoryof marketing ethics can it enhance our understanding of principal agent relationships in channels of distribution this paper advances the hunt vitell general theory of marketing ethics as a framework for enriching current understanding of both long term marketing relationships in general and principal agent associations specifically under economic models of agency theory manufacturer distributor relationships are conceptualized as principal agent associations where both parties are assumed be motivated exclusively by short term financial self interest within the logical constraints of zero sum game conditions as a general model of ethical decision making and behavior in marketing the hunt vitell theory illustrates how ethical decisions are predicated not only upon estimations of potential benefits or outcomes using teleological criteria but also deontological evaluations which invoke norms and values furthermore the recent ideas advanced in relationship marketing perspectives suggest that distribution channel associations premised upon non zero sum or symbiotic assumptions may be more effective and more jointly profitable based upon the hunt vitell model propositions are formulated that complement the understanding of agency theory within the context of marketing channel relationships and thus may represent a basis for more effective agency selection and interaction in marketing practice

optimal tariff calculations in alternative trade models and some possible implications for current world trading arrangements in this paper we report calculations of optimal tariffs both with and without retaliation in a sequence of 2 2 trade models we extend the earlier calculations by johnson 1954 1961 and gorman 1957 which assume constant elasticity offer surfaces by using functional forms from the cobb douglas ces les family for utility functions and by also incorporating production into our calculations results indicate that the most critical parameters in any such calculations for a 2 2 model are the import prices elasticities and we briefly survey the empirical evidence as to their values our major conclusion is that these models confirm the suggestion from casual inspection of reported trade elasticities that current levels of tariff protection are some distance from optimal tariffs and that the margin for tariff retaliation in a worldwide trade war is potentially large other implications of the results are explored in the text

impacts of climate policy on the competitiveness of canadian industry how big and how to mitigate competitiveness concerns have been at the forefront of climate policy debates in canada particularly as a result of its high energy intensity and significant exposure to international markets this paper uses a dynamic computable general equilibrium model to assess the likely impacts on sectoral competitiveness that would accompany efforts to meet greenhouse gas mitigation targets that have been set by the canadian government additionally it evaluates several design mechanisms that could be used to reduce the negative competiveness impacts associated with adoption of domestic climate policies the analysis suggests that several sectors would likely face significant competiveness challenges under a reference scenario in which permits are given to emitters in lump sum however it finds that competiveness impacts can be minimized by using output based recycling of permits or by using border tax adjustments

mnc subsidiary channel relationships as extended links implications of global strategies foreign subsidiaries of multinational corporations mncs rely on external partners such as channel partners to achieve global objectives we conceptualize the subsidiary s channel partner as an extended link of the mnc s internal network thus the subsidiary s adaptation and execution of the mnc s global strategies should influence the subsidiary s channel relationship and performance building on the strategy environment alignment framework we study the influence of mnc global strategies global efficiency multinational flexibility and worldwide learning on a subsidiary s channel commitment and the moderating influence of the host country environment survey data from german and japanese mncs in the united states indicate the importance of global strategies to a channel relationship for example we find that an emphasis on multinational flexibility is detrimental but worldwide learning benefits the subsidiary s channel commitment we also find that the host country environment plays a contingent role for example a global efficiency strategy is beneficial for channel commitment in a stable environment but detrimental in a dynamic environment our research offers key implications for mncs we suggest that when mncs decide to lay emphases on global strategies the mncs should consider not just their internal subsidiary network but also their extended channel partner links that function in foreign markets

the distribution of gains from bilateral tariff reductions abstract a two good two country model is used to analyse the distribution of gains from proportionate bilateral tariff reductions it is shown that the distribution of gains is given by the solution to a rather complicated quadratic equation which exhibits multiple real roots the country with the more elastic offer surface will be the relative gainer for example if it has either a very large or a very small tariff relative to the other country s tariff and relative to its own optimal nash equilibrium tariff

maverick buying eliminate participate leverage companies have consolidated purchasing volumes that were scattered across organizational units to lower purchasing prices to realize these benefits companies frequently opt for a hybrid organizational structure that is conducive to a specific form of non compliant behavior referred to as maverick buying local business units bypass official processes and source from suppliers other than the designated supplier this non compliant action counteracts companies efforts to benefit from volume consolidation we consider maverick buying as a form of hidden action in a principal agent framework and provide a formal analysis of strategies that companies employ to avoid maverick buying or remedy its negative consequences our results suggest that the conventional strategy of monitoring and penalizing agents in case of non compliance not only has clear limitations but may be ineffective rather than trying to eliminate maverick buying through monitoring companies should under some conditions participate in agents superior market knowledge we propose a self selection model the principal offers contract menus termed participation menus tailored to agents with attractive outside options and agents without incentives to buy maverick we demonstrate that participation menus perform particularly well when conventional monitoring fails and that in some situations they can be employed to leverage the agents purchasing capabilities

how reasonable are assumptions used in theoretical models computational evidence on the likelihood of trade pattern changes abstract in theoretical literature it is common to make the assumption that in a multi country multi good world the direction of trade import and export by commodity ispredetermined and fixed for each good for each country we consider a simple three country three good pure exchange model with ces preferences we compute free tradecompetitiveequilibria three countrynon cooperativenashequilibria andcustomsunionequilibria for randomised parameterizations and find that trade pattern changes betweenfree trade and customs union equilibria in around 35 of cases jel classification f10 f13 f15 jusqu a quel point est ce que les postulats utilis es dans les mod eles th eoriques sontraisonnables r esultats calcul es sur la vraisemblance de changements dans les patterns decommerce dans la litt erature th eorique sp ecialis ee il est assez commun de postuler que dans un monde a plusieurs pays et a plusieurs biens la direction du commerce impor tations et exportations ventilees par biens est pr ed etermin ee et fixe pour chaque bien etchaque pays les auteurs examinent le cas d un modele simple d echange pur a trois pays et trois biens ou les pr ef erences ont des elasticit es constantes de substitution on calcule les equilibres concurrentiels de libre echange les equilibres non coop eratifs de trois pays a la nash et des equilibres d unions douani eres pour certaines param etrisations al eatoires il semble qu il y a changement dans les patterns de commerce dans 35 des cas quand onpasse d equilibres de libre echange a des equilibres d unions douani eres

the impacts of carbon pricing on coastal megacities a cge analysis of singapore abstract pricing carbon is a widely used policy instrument for climate change mitigation quantitative analysis of carbon pricing are mainly conducted at the regional and national level rarely at the city level due to data availability as a representative of coastal megacities that are vulnerable to both climate change and climate policies singapore has announced to impose carbon tax on large direct emitters as a complementary mitigation option to technical measures a city level computable general equilibrium cge model is developed to simulate potential impacts of carbon pricing on the city including paying border carbon adjustment bca on exports or introducing a domestic carbon tax different sector coverages and carbon tax revenue recycling schemes are investigated for domestic carbon tax the simulation results show that a domestic carbon tax is a more cost effective option than paying bca given an identical carbon price at s 10 t co 2 gdp total exports and household consumption would decline less and average abatement cost is much smaller in the carbon tax scenarios compared to the bca scenario in terms of absolute emissions reduction a carbon tax that covers energy manufacturing and land transport sectors would be preferred making emissions around 2 7 lower than 2010 baseline level