Carbon leakage revisited: unilateral climate policy with directed technical change

Directed Technical Change, Unilateral Actions, and Climate Change

In this paper, I investigate the implications of policy-induced technological change based on a multi-region variant of the directed technical change model developed by Acemoglu et al. (2012). On top of the pollution externality accompanied by carbon dioxide emission, different regions are connected through a global market where energy-related machine producing firms monopolistically compete wi...

Carbon Dioxide Fertilisation and Climate Change Policy

Climate policy, interconnection and carbon leakage: the effect of unilateral UK policy on electricity and GHG emissions in Ireland

This paper examines the effect on Ireland’s Single Electricity Market (SEM) of the UK’s unilateral policy to implement a carbon price floor for electricity generation based on fossil-fuel. We simulate electricity markets and find that, subject to efficient use of the interconnectors between the two markets, a carbon price floor will lead to carbon leakage, with associated emissions in the Repub...

Directed Technical Change

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Environmental Policy and Directed Technical Change in a Global Economy: The Dynamic Impact of Unilateral Environmental Policies

This paper builds a two-country (North, South), two-sector (polluting, nonpolluting) trade model with directed technical change, examining whether unilateral environmental policies can ensure sustainable growth. The polluting good is produced with a clean and a dirty input. A temporary Northern policy combining clean research subsidies and a trade tax can ensure sustainable growth but Northern ...