Positive Effects of International Trade inPromoting Global Carbon Reduction Agreements
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| Title | Positive Effects of International Trade inPromoting Global Carbon Reduction Agreements
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| Author | Cai Yuezhou and John Whalley |
| Organization | Institute of Quantitative & Technical Economics, CASS;Department of Economics, the University of Wester Ontario |
| Email | caiyuezhou@cass.org.cn |
| Key Words | Reduction Incentives; International Trade; Numerical General Equilibrium Simulation |
| Abstract | The global carbon reduction negotiation is a cooperative game with externality. A single-good non-trade multi-country model framework is established to depict the carbon reduction incentives of each country. Based on available data and literatures, reduction incentives of each country in different scenarios are simulated using Numerical General Equilibrium Simulation Technique. The factor of International Trade is further introduced into the model framework, and the corresponding reduction incentives simulations are made as well. The simulation results show that: (1) Larger economic scale, longer warming lasting period, and the bigger utility loss from warming would improve the reduction incentives of each country; (2) The presence of international trade would enhance the reduction incentives of each country and make the carbon reduction agreements more likely because reducing the output of own country good has a positive term of trade effect which reduces the cost of output reduction; (3) The revival of New Protectionism in name of carbon reduction would not promote carbon reduction, but instead prevent the each country from come to reduction agreements. |
| Serial Number | WP43 |
| Time | 2011-01-10 |
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