is free trade in the interest of exporting countries when there is ecological dumping abstract given conditions of oligopolistic competition the coordinated ban of direct export promoting policies e g in the eu or by gatt increases the income of exporting countries however in the presence of environmental distortions free trade can lead to ecological dumping in exporting countries the question arises if free trade is still in the interest of exporting countries we show that welfare maximizing governments of exporting countries prefer free trade even if countries subsidize their local industries indirectly via ecological dumping the existence of further national policy instruments does not make free trade agreements obsolete

determinants of obesity in brazil the effects of trade liberalization and socio economic variables this article aims to evaluate a possible relation between increased brazilian trade openness and increasing observed rates of overweight and obesity during the last 25 years we develop an economic

welfare and trade effects of international environmental agreements we analyse the welfare effects of environmental policy arising from the formation of an international environmental agreement on the participating and non participating countries and thus shed light on the potential incentives for a country to join such an agreement within a n country q goods general equilibrium framework under free trade conditions we consider unilateral and cooperative policy settings and within the latter country specific and fully harmonized policies within the agreement a key result of the paper is the emergence of a negative relationship arising from terms of trade effects between the welfare changes of the participating and non participating countries following the formation of the agreement these however do not result in a zero sum welfare outcome for the world as a whole

environmental policy and international trade when governments and producers act strategically some environmentalists express concern that trade liberalization may damage the environment by giving governments incentives to relax environmental policies to give domestic producers a competitive advantage support for such concern may be given by models of imperfectly competitive trade where there may be rent shifting incentives for governments to relax environmental policies but there are also incentives for producers to act strategically e g through their investment in rd ii allowing governments to act strategically increases the incentive for producers to act strategically iii welfare is lower when both parties act strategically and iv strategic behavior by producers and governments is greater when governments use emission taxes than when they use emission standards

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

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

equilibrium pollution taxes in open economies with imperfect competition abstract this paper argues that imperfect competition in global markets creates a strategic interaction between governments that can lead to the inefficient distortion of pollution taxes this distortion can be decomposed into a rent capture effect and a pollution shifting effect the rent capture effect lowers equilibrium taxes as each country attempts to gain a competitive advantage over its trading partner and thereby capture foreign rent through net exports the pollution shifting effect raises equilibrium taxes as each country attempts to transfer production and its associated pollution to the other country this effect vanishes if pollution is perfectly transboundary because shifted pollution causes as much damage to the domestic environment as does domestic pollution the net effect on symmetric equilibrium taxes is negative except in the special case of perfect competition with no transboundary pollution in this case the two effects are mutually offsetting and the nash equilibrium is efficient when pollution is at least partially transboundary there also arises the usual transboundary externality and this reinforces the negative net strategic effect giving rise to equilibrium taxes that are lower than what is globally efficient

trade liberalization environmental policy and welfare we analyze how trade liberalization affects environmental policies in the context of bilateral trade and imperfect competition instead of looking at the strategic distortions that trade introduces in environmental policies the focus of most existing studies we analyze how these distortions change in the face of a bilateral reduction in tariffs the incentives to distort environmental protection may be reduced by this move as a consequence environmental policies may be more stringent also welfare is likely and for some instruments certain to increase

cost benefit reflective distribution charging methodology this paper describes the principle and implementation of a new mw mvar miles charging methodology which was developed to reflect three key cost drivers in distribution network development the distance used to support nodal real and reactive power injection withdrawal the degree of support offered by the network assets and the operating condition of the supporting assets in terms of their power factors the inclusion of the latter driver allows the developed charging methodology to reward network users who are contributing to better power factors and better network utilization while penalizing customers who worsen power factors and network utilization as a consequence the charging model is able to provide forward looking incentives for network customers to behave in a manner to better the network condition which will in turn help to reduce the cost of future network development in addition the separation of real and reactive power pricing would give network users clear indications of the cost of their reactive power draw from the network which in turn could help them to evaluate the economics in investing in reactive power compensation devices the proposed charging methodology is demonstrated on a practical eight busbar distribution system with a mixed demand and embedded generation eg this paper results from work undertaken in a project on distribution charging methodologies for western power distribution the views in this paper expressed are not those of western power distribution

carbon tariffs and cooperative outcomes abstract in the absence of an international environmental agreement iea on climate change a country may be reluctant to unilaterally implement environmental actions as this may lead to the relocation of firms to other lax on pollution countries to avoid this problem while still taking care of the environment a country may impose a carbon tariff that adjusts for the differences between its own carbon tax and the other country s tax we consider two countries with a representative firm in each one and characterize and contrast the equilibrium strategies and outcomes in three scenarios in the first benchmark scenario in a first stage the regulators in the two countries determine the carbon taxes noncooperatively and in a second stage the firms compete a la cournot in the second scenario the regulators cooperate in determining the carbon taxes while the firms still play a noncooperative cournot game in the third scenario we add another player e g the world trade organization which announced a border tax in a prior stage the game is then played as in the first scenario our two major results are i a border tax adjustment bta mimics quite well the cooperative solution in setting the carbon taxes as in scenario two this means that a bta may be a way around the lack of enthusiasm for an iea ii all of our simulations show that a partial correction of the difference in taxes is sufficient to maximize total welfare in short the conclusion is that a bta may be used as a credible threat to achieve an outcome that is very close to the cooperative outcome

international trade and environmental quality a survey abstract international trade has been incorporating various aspects of environmental issues since 1970 the extent to which environmental problems might affect many facets of trade or vice versa has been the subject of considerable debate over these years in this article we have attempted to establish some of the links between international trade and environmental quality by performing a comprehensive literature review we discuss issues such as establishing direct and indirect effects of international trade on environmental quality effects of trade on economic development environmental quality and energy and their relation with each other and finally the role of governments and international organizations in this context studies have so far revealed some linkages between trade and environment through conventional trade theory however interactions between international trade and types of pollution their sink and assimilative capacity need to be analyzed using a general equilibrium approach currently very little knowledge and agreement on the nature of interactions between trade theories development process and environmental quality exist existing studies have shown that the structure of environmental regulations should be modified to reflect the existence of trade under imperfect competition therefore further research on the interaction between new trade theory and environmental regulation is needed also theoretical and quantitative analysis regarding the effects of environmental regulations on competitiveness and location decision is needed the intensity and type of environmental measures vary across issues and countries therefore harmonizing environmental measures creates an inefficient atmosphere and to assume that trade restrictions will either improve or reverse the environmental damages is a serious mistake given the dynamic and intricate nature of the problem trade and environment debate continues despite vast research and poses a challenge for researchers and policy makers in the foreseeable future

pollution abatement subsidies and the eco industry this paper considers the combination of pollution taxes and abatement subsidies when some polluting firms procure their abatement goods and services from an oligopolistic eco industry the regulator must here cope with two simultaneous price distortions one that comes from pollution and the other which is caused by the eco industry s market power in this context we show that taxing emissions while subsidizing polluters abatement efforts cannot lead to first best but the opposite occurs provided it is the eco industry s output which is subsidized when public transfers also create distortions welfare can be higher if the regulator uses only an emission tax but subsidizing abatement suppliers while taxing emissions remains optimal when the eco industry is concentrated

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

calculating short run marginal costs of active and reactive power production proper pricing of active and reactive power is an important issue for economic and secure operations of power systems in an open transmission access ota environment this paper presents a flexible formulation for this purpose the proposed formulation identifies an important price component for reactive power which is fundamentally different from those existing in the literature this makes the pricing of reactive power more understandable the proposed approach is efficient for real time application and allows for carrying out active and reactive power pricing simultaneously or independently through the use of the decoupled optimal power flow formulation price signals derived from this approach are quite meaningful from an engineering point of view in addition the proposed approach can be easily extended to evaluate nugs and wheeling transactions the paper includes test results on the 30 and 118 bus ieee standard systems

corrective taxation versus liability as a solution to the problem of harmful externalities abstractalthough the corrective tax has long been viewed by economists as a desirable remedy for the problem of harmful externalities its actual use has been limited mainly to the domain of pollution liability in contrast has great importance in controlling harmful externalities i compare the tax and liability in theory and suggest that the conclusions help explain the observed predominance of liability over taxation except in the area of pollution the following factors are emphasized inefficiency of incentives under taxes when the state cannot practically take into account all variables that significantly affect expected harm efficiency of incentives under strict liability which requires only that actual harms be measured efficiency of incentives under the negligence rule administrative cost advantages of liability deriving from its being applied only when harm occurs and dilution of incentives under liability when suit is unlikely or injurers cannot pay fully for harm

wheeling rates of reactive power flow under marginal cost pricing wheeling is the transmission of electrical power and reactive power from a seller to a buyer through a transmission network owned by a third party the wheeling rate is an area of intense research in view of increased deregulation this paper uses a wheeling rate based on marginal cost pricing and implemented using a modification of the optimal power flow opf a case study based on the ieee 30 bus system illustrates the magnitudes and ranges that wheeling rates might have in different circumstances special attention is paid to reactive wheeling which cannot be analyzed with a dc model used by previous authors the ratio of wheeling rates between real and reactive flow shows the importance of the latter the paper also discusses the significance of this for the trade off between paying for reactive wheel or investing in compensating plant

eco dumping capital mobility and international trade a small open economy s optimal environmental policy is studied in a model with international capital mobility and local pollution the country produces traded as well as non traded goods is it in the country s interest to engage in ecological dumping by choosing generous pollution allowances for the traded good sector the answer depends decisively on the policy regime in use dumping is not optimal if the country ensures that the implicit rent on pollution is completely appropriated within the country however if the implicit factor reward on pollution leaves the country because it accrues to foreign owners of mobile capital the local welfare maximizing government tends to discriminate against the traded good sector the opposite of ecological dumping

the signaling effect of emission taxes under international duopoly we analyze equilibrium emission taxes under international cournot duopoly in the presence of asymmetric information between firms when each firm does not know the production cost of its rival located in the other country the government of each country can use its emission tax as a signal of the competitiveness of its domestic firm we show that owing to this signaling effect the equilibrium emission tax and expected welfare of each country can be higher than those under symmetric information between firms or even higher than those obtained if the governments were to non strategically set the tax rate equal to the expected marginal damage from pollution i e the pigouvian tax level our results suggest that the presence of asymmetric information between firms can mitigate a race to the bottom in strategic environmental policymaking

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

endogenous timing in strategic environmental policymaking in this paper we endogenize the timing of policymaking in a simple two country model of strategic environmental policy we consider a timing game in which two policymakers non cooperatively decide their preferred sequence of moves before setting emission tax rates we show that whether the policymakers implement emission tax policies simultaneously or sequentially crucially depends on the magnitude of environmental damages when the damages are insignificant the tax rates are strategic substitutes and the simultaneous move policymaking emerges in equilibrium in contrast when the damages are significant the tax rates are strategic complements and sequential move policymaking emerges we also extend the model by allowing for differences in the vulnerability to environmental damages between countries when the differences are large the unique equilibrium of the game is the situation where the less vulnerable country acts as a leader in the case where multiple equilibrium emerges the risk dominant equilibrium is also that where the less vulnerable country leads

optimal active reactive power dispatch under competition via bilevel programming this paper proposes an active reactive power dispatch procedure that is expressed via a bilevel optimization problem whose upper and lower level criteria are respectively the minimum opportunity cost and minimum offered price of active power it analyzes the impact of minimizing such criteria on system operation and it investigates the behavior of marginal prices and opportunity costs and their use in mechanisms to compensate generators for power provision the bilevel problem is solved using a version of interior point methods derived for mathematical programs with complementarity constraints results obtained with three test systems are analyzed

trade climate change and the political game theory of border carbon adjustments the lack of real progress at the durban climate change conference in 2011 postponing effective action until at least 2020 has many causes one of which is the failure to address trade issues and in particular carbon leakage this paper advances two arguments first it argues that the conventional view of border carbon adjustments bcas as a dirty trade barrier should be turned on its head rather the absence of a carbon price comprises an implicit subsidy to dirtier production in non regulated markets second bcas could act as a game changer when climate policy negotiations move at a glacial pace if at all materially stronger progress could be achieved indirectly from the threat of unilateral trade policies the paper shows how this could come about using a simple political game theory model the appropriate game form is one in which parties move unilaterally and sequentially given the failure to agree on a common course of action and are fully aware of the impacts of their actions the paper shows that properly crafted bcas could help reduce trade distortions limit the competiveness effects and help build a broader coalition of interests for more global actions

taxes and subsidies for pollution intensive industries as trade policy abstract this paper constructs a model of international oligopoly with negative externalities in production in which optimal environmental policy responses to foreign emission tax and subsidy programs can be calculated it is shown that by granting subsidies for abatement efforts or for a heavily taxed polluting input domestic net welfare is improved by capturing a greater share of the world market since the subsidy programs are supposed to improve the quality of the global environment they can be justified on environmental grounds in addition we show that a pigouvion emission tax restores efficiency in natural resource allocation whereas subsidy programs are in principle used as instruments in imperfectly competitive international markets

trade structure transboundary pollution and multilateral trade liberalization the effects on environmental taxes and welfare this paper considers a trade situation where the production activities of potentially heterogeneous countries generate pollution which can cross borders and harm the well being of all the countries involved in each of those countries the policy maker levies pollution taxes on the polluting firms and a tariff on imports in order to correct that distortion the purpose of the paper is to investigate the effect of a reduction in the tariff on equilibrium pollution taxes and welfare the existing literature has investigated this problem for trade between two identical countries this paper analyzes the problem in the more realistic context where countries are not necessarily identical and trade can be multilateral it becomes possible to show what bias is introduced when those two realities are neglected i find that a tariff reduction can actually lower output it can also lower welfare even if pollution is purely local

a security constrained bid clearing system for the new zealand wholesale electricity market this paper reports upon the mathematical models and implementation of the scheduling pricing and dispatch spd application for the new zealand electricity market nzem spd analyzes bids for energy offers reserve offers and energy demands and recognizes explicitly the effects on bid clearing due to transmission congestion network losses reserve requirements and ramp rate limits advanced lp solution methods are utilized to solve the large scale constrained optimization problem results on a 67 bus test system and the nzem are included

the environmental conundrum of rare earth elements clean technologies such as solar panels and wind turbines help to curb global emissions but they require dirty inputs for their production i e mining rare earth elements rees pollutes local environments rees are also the object of rent shifting strategic trade policies as highlighted by a recent wto ruling against china s quotas and tariffs on exports of rees we construct a three country trade model with an environmental damage function in order to examine the effects of three policies with different implications for the equilibrium quantities of dirty inputs and clean technologies a downstream subsidy an upstream export tariff and an upstream pollution tax we relate the welfare implications of the policies to the parameters of the damage function and to the number of downstream competitors the effects of a unilateral policy switch from an export tariff to a domestic pollution tax as suggested by china s reaction to the wto challenge are also examined

the welfare consequences of pollution tax harmonization a key and often controversial issue in environmental negotiations is the appropriate extent of harmonization of environmental policies this paper within a general equilibrium model of international trade with endogenous pollution discharges identifies instances in which pollution tax harmonization can deliver potential pareto improvements

the anti paradox of cooperation diversity may pay abstract this paper considers the stability and success of a public good agreement we allow for any type and degree of asymmetry regarding benefits and costs we ask the question whether asymmetry and which type and degree of asymmetry is conducive to cooperation we employ a simple non cooperative game theoretic model of coalition formation and derive analytical solutions for two scenarios an agreement without and with optimal transfers a central message of the paper is that asymmetry does not have to be an obstacle for successful cooperation but can be an asset we qualify two central results in the literature firstly the paradox of cooperation known since barrett 1994 and reiterated by many others afterwards stating that under those conditions when cooperation would matter most stable agreements achieve only little secondly a kind of coalition folk theorem known without proof in the literature for a long time stating that without transfers stable coalitions will be smaller with asymmetric than symmetric players we show that even without transfers the grand coalition can be stable if there is a negative covariance between benefit and cost parameters with massive gains from cooperation moreover with transfers many distributions of benefit and cost parameters lead to a stable grand coalition again some of them implying huge gains from cooperation stability and success greatly benefit from a very skewed asymmetric distribution of benefit and costs i e diversity may pay

which border taxes origin and destination regimes with fiscal competition in output and emission taxes abstract this paper posits a two stage game in tax regime and tax rates to study the property of second best emission and output taxes in a two country world with an atmospheric externality it shows that i either the destination destination or the origin origin tax regime may constitute the subgame perfect nash equilibrium of this game ii either regime may pareto dominate the other iii it is possible to have a prisoner s dilemma game where the origin origin regime pareto dominates but the choice of the destination regime is the dominant strategy for each country other results include iv under origin origin regime the output tax is used for fiscal competition the emission tax is set at a rate equal to the national marginal social damage of emissions and public goods are provided suboptimally v under destination destination regime the output tax is ineffective as an instrument for fiscal competition the emission tax is used not only for combating pollution but also for tax competition the tax is set at a rate below the national marginal social damage of emissions emissions are pushed above their closed economy level the provision of public goods are optimal

strategic environmental policy under incomplete information this paper introduces incomplete information into recent analyses of strategic environmental policy it is shown how asymmetric information between planners and producers affects national incentives to impose strategic environmental standards on domestic industries in international oligopolistic competition relative to the full information case incomplete information is likely to mitigate allocative distortions originating from strategic behaviour a countervailing effect tending to raise distortion is however revealed from the analysis this effect is absent when governments intervene in free trade through direct production subsidies the results suggest that incentives to capture foreign rents are less reduced due to private information when environmental standards rather than direct production subsidies are the strategic instrument

a reactive power capacity market using annual auctions this paper presents a new approach to design reactive power capacity markets under this approach annual auctions to procure reactive power capacity are conducted by the system operator two products are defined reactive power generation and absorption capacity which can be supplied by different independent var sources such as generators svcs capacitor banks and shunt reactors reactive power capacity is allocated using an optimization algorithm that matches capacity bids and system reactive power needs for peak and low demand hours the reactive power requirements are calculated taking into account system contingencies and the dynamic performance of the var sources under these situations another key proposal of the paper is the distribution of costs of the reactive power capacity market to the agents responsible for contingencies according to the use of the service by each market participant this remuneration approach provides fair and efficient economic signals to all market participants the applicability of the approach is illustrated with two case studies

climate clubs overcoming free riding in international climate policy notwithstanding great progress in scientific and economic under standing of climate change it has proven difficult to forge inter national agreements because of free riding as seen in the defunct kyoto protocol this study examines the club as a model for international climate policy based on economic theory and empirical modeling it finds that without sanctions against non participants there are no stable coalitions other than those with minimal abatement by contrast a regime with small trade penalties on non participants a climate club can induce a large stable coalition with high levels of abatement jel q54 q58 k32 k33

efficiency inducing taxation for polluting oligopolists abstract we show that there exists a time independent tax rule that guides polluting oligopolists to achieve the socially optimum production path the optimal tax is dependent on the current pollution stock and it may be negative when the pollution stock is low a surprising result is that the optimal tax rule may give firms a subsidy for an initial time interval even though under laissez faire their output always exceeds the socially optimal output this subsidy however induces firms to produce less than they would under laissez faire

optimal emission pricing in the presence of international spillovers decomposing leakage and terms of trade motives abstract carbon leakage provides an efficiency argument for differentiated emission prices in favor of emission intensive and trade exposed sectors under unilateral climate policy however differential emission pricing can be used as a beggar thy neighbor policy to exploit terms of trade adopting an optimal tax framework we propose a method to decompose the leakage and terms of trade motives for emission price differentiation we employ our method for the quantitative impact assessment of unilateral climate policy based on empirical data we find that the leakage motive yields only small efficiency gains compared to uniform emission pricing likewise the terms of trade motive has rather limited potential for strategic burden shifting we conclude that in many cases the simple first best rule of uniform emission pricing remains a practical guideline for unilateral climate policy design

evaluation of wheeling and nonutility generation nug options using optimal power flows the application of optimal power flow for the evaluation of wheeling and nonutility generation nug related options is presented both wheeling and nug options affect vital attributes such as system security voltage profile losses and var reserves these options put a strain on the existing transmission system and may restrict economic utility dispatching optimal power flows may be used to determine the best control settings to accommodate wheeling or nug options so as to maintain system security while minimizing losses or production cost short term marginal wheeling costs may be derived using optimal power flows case studies involving the northeast utilities and ieee test systems are presented these cases show that optimal power flows can be used effectively to address a broad range of wheeling or nug related planning issues

asymmetric tax policy responses in large economies with cross border pollution we build a model of cross border pollution between two large open economies one importing the polluting good and the other exporting it and derive their non cooperative trade and environmental tax policies we show among other things that 1 in response to a bilateral reduction in trade taxes by both countries the former country s optimal policy is to lower its nash emissions tax while the latter s is to raise it and 2 in response to an increase in emissions tax rates by both countries the former country s optimal reaction is to raise its nash import tariff while the latter s is to reduce its nash export tax that is in the present context freer trade leads the exporting country to adopt stricter while the importing country laxer environmental tax policies

decomposition model and interior point methods for optimal spot pricing of electricity in deregulation environments in this paper an integrated optimal spot pricing model is presented first the proposed model includes the detailed derivation of optimal nodal specific real time prices for active and reactive powers and the method to decompose them into different components corresponding to generation loss and many selected ancillary services such as spinning reserve voltage control and security control the features of the proposed model are discussed in relationship to existing pricing models and classical economic dispatch the model is then implemented by modifying existing newton opf methods through interior point algorithms which can effectively avoid go no go gauge i e highly volatile in the calculation of spot prices case studies on 5 bus and ieee 30 bus systems are reported to illustrate the proposed method

comparing policies to combat emissions leakage border carbon adjustments versus rebates we explore conditions determining which anti leakage policies might be more effective complements to domestic greenhouse gas emissions regulation we consider four policies that could be combined with unilateral emissions pricing to counter effects on international competitiveness a border charge on imports a border rebate for exports full border adjustment and domestic output based rebating each option faces different potential legal hurdles in international trade law each also has different economic impacts while all can support competitiveness none is necessarily effective at reducing global emissions nor is it possible to rank order the options effectiveness depends on the relative emissions rates elasticities of substitution and consumption volumes we illustrate these results with simulations for the energy intensive sectors of three different economies the united states canada and europe although most controversial full border adjustment is usually most effective but output based rebating for key manufacturing sectors can achieve many of the gains

the costs of wheeling and optimal wheeling rates wheeling is the transmission of electrical energy from a buyer to a seller through a transmission network owned by a third party this paper provides a theoretically sound yet practical to implement basis for setting wheeling rates these wheeling rates are based on marginal costs determined by losses and effects of line flow and voltage magnitude constraints adjusted up or down as necessary to account for embedded capital costs i e revenue reconciliation simple numerical examples are provided to illustrate interesting phenomena such as negative wheeling rates which yield positive net revenue comparisons with present day wheeling rates show that major differences exist the wheeling rates of this paper yield a no lose situation for the buying selling and wheeling utilities

the role of mfn under asymmetries in environmental standards abstract we critically examine the implications of the most favored nation mfn clause under asymmetric environmental standards using an oligopolistic intra industry trade model we show that environmentally beneficial trade diversion and higher world welfare obtain under tariff discrimination relative to mfn

estimating carbon leakage and the efficiency of border adjustments in general equilibrium does sectoral aggregation matter abstract estimates of the carbon leakage resulting from sub global climate policies tend to be lower when using economy wide general equilibrium models than what technology specific and bottom up models suggest in order to test whether this difference is due to excessive sectoral aggregation i exploit disaggregated data and estimate unobserved values to create a dataset with rich industrial sector detail the bias caused by sectoral aggregation is estimated by calibrating a computable general equilibrium model to this dataset and comparing results with those generated from more aggregated data a stylized unilateral carbon pricing policy is simulated results show that aggregated calibrations overestimate industrial output loss and underestimate the increase in the co 2 embodied in imports the efficiency of border carbon adjustments at reducing leakage is also underestimated however i find that general equilibrium estimates of carbon prices and economy wide leakage rates are mostly unaffected by the degree of industrial aggregation

output based rebating of carbon taxes in a neighbour s backyard competitiveness leakage and welfare we investigate how in an open economy carbon taxes combined with output based rebating obr perform in interaction with the carbon policies of a large neighbouring trading partner analytical results suggest that whether the purpose of the obr policy is to compensate firms for carbon tax burdens or to maximize welfare accounting for global emission reductions the obr rate should be positive in policy relevant cases numerical simulations for canada with the us as the neighbouring trading partner indicate that the impact of us policies on the obr rate will depend crucially on the purpose of the canadian obr policies if for a given us carbon policy canada s aim is to restore the competitiveness of domestic emission intensive and trade exposed eite firms to the same level as before the introduction of its own carbon taxation we find that the necessary domestic obr rates will be insensitive to the foreign carbon policies however if not only the canadian carbon tax but also an equally high us tax is introduced compensatory canadian obr rates will be up to 50 lower depending on the sector and on us obr policy if the policy objective is to increase economy wide allocative efficiency welfare of canadian policies by accounting for carbon leakage the us policies will have only a minor downward pressure on desirable obr rates in canada practical choices of obr rates hardly affect overall domestic economic performance thus output based rebating qualifies as an instrument for compensating eite industries without a large sacrifice in terms of economy wide allocative efficiency

the effect of emission taxes and abatement subsidies on market structure abstract emission taxes and abatement subsidies are considered to be efficient measures for environment protection the purpose of this paper is to quantify their effects on industry output firm output and on the number of firms in the industry three types of market structure are under discussion perfect competition oligopoly and a dominant firm with a competitive fringe it turns out that emission taxes and abatement subsidies affect the structure of the polluting industry in opposite ways while the effects on industry s emissions are similar in direction but different

self enforcing environmental agreements and international trade abstract in the basic model of the literature on international environmental agreements ieas barrett 1994 rubio and ulph 2006 the number of signatories of self enforcing ieas does not exceed three if non positive emissions are ruled out we extend that model by introducing a composite consumer good and fossil fuel that are produced and consumed in each country and traded on world markets when signatory countries act as a stackelberg leader and emissions are positive the size of stable ieas may be significantly larger in our model with international trade this would be good news if larger self enforcing ieas would lead to stronger reductions of total emissions unfortunately in the presence of self enforcing ieas total emissions turn out to be only slightly less than in the business as usual scenario independent of the number of signatories we also investigate the role of international trade by comparing our free trade results with the outcome in the regime of autarky our autarky model turns out to be coincident with the basic model of the literature alluded to above we contribute to that literature by showing that in autarky the outcome of self enforcing ieas is also almost the same as in the business as usual scenario

robust policies to mitigate carbon leakage abstract unilateral climate policy induces carbon leakage through the relocation of emission intensive and trade exposed industries to regions without emission regulation previous studies suggest that emission pricing combined with border carbon adjustment is a second best instrument and more cost effective than output based rebating we show that the combination of output based rebating and a consumption tax for emission intensive and trade exposed goods can be equivalent with border carbon adjustment moreover it is welfare improving for a region that implements emission pricing along with output based rebating to introduce such a consumption tax the welfare gain is particularly large if output based rebating is already implemented for a sector that is not much exposed to leakage e g due to uncertainty about exposure or due to lobbying activities thus supplementing output based rebating with a consumption tax constitutes robust policies to mitigate carbon leakage

corrective taxation versus liability have been emphasized as a means of control of activities that generate harm especially in the domain of pollution yet their use is in fact lim ited robert n stavins 2003 in contrast liabil ity has great importance in reducing harm much of the vast terrain of accidents from oil spills to crane mishaps to car collisions is subject to liability but not to taxation i here compare cor rective taxation to liability in two versions of a model with a view toward shedding light on the difference in their application 1 in the first version the danger from an injurer s activity depends on factors that vary among injurers for example the probabil ity and seriousness of an oil spill due to an oil tanker accident will depend on the strength of the tanker s hull and the vulnerability of fishing activity and tourism to a spill and the expected harm from a crane accident will depend on char acteristics of the crane and the exposure to risk of nearby buildings and passersby i assume that it is impractical for the tax to be based on many such variables and for simplicity that the tax is a function only of an injurer s level of activity amount of oil transported number of uses of a crane hence the tax will not induce injurers to choose their levels of activity optimally under liability an injurer who is sued is pre sumed to pay for the harm that occurs 2 thus if suit for harm were always brought an injurer s expected liability would equal expected harm so that injurers would choose optimal levels of activity further this would occur without the state s needing information about the danger of activities to impose liability requires only that the state determine the harm that eventuates the state need not gauge the risk of an oil spill it need only measure the harm from a spill that occurs however it is assumed that suit is not always brought for harm may be hard to trace to its author and it may be too low to make suit worthwhile consequently expected liability will be less than expected harm3 and levels of activity will be excessive it follows that an assessment of the tax versus liability depends on a comparison of the ineffi ciency of the tax caused by variation in the dan ger of activities with the inefficiency of liability caused by escape from suit joint use of taxation and liability is also considered it is shown that liability should be imposed to the complete extent injurers who are sued should pay for the entire harm but under a general condition the tax should be less than expected harm in essence liability should be employed fully because it creates a more effi cient incentive than taxation the tax should be

opf for reactive pricing studies on the ngc system retail transmission services like those being provided by the national grid company ngc in england and wales pose new challenges for the pricing of reactive power supply a reactive power market approach has been proposed by ngc and continues to be evaluated such an approach includes a novel requirement for transmission constrained economic dispatch of var a problem in the security constrained optimal power flow opf class the problem formulations handled by the opf package in use could not accommodate ngc s requirements this paper describes the reactive pricing problem being addressed the modeling requirements and the resulting extensions made to the opf formulation and package it discusses the test results obtained to date on the ngc system

stable coalition structures with externalities this paper argues that the sign of external effects of coalition formation provides a useful organizing principle in examining economic coalitions in many interesting economic games coalition formation creates either negatie externalities or posi tie externalities for nonmembers examples of negative externalities are research coalitions and customs unions examples of positive externalities include output cartels and public goods coalitions i characterize and compare stable coalition structures under the following three rules of coalition formation the open