Three essays on the economics of climate change

Brenda Tang, Université D'Ottawa / University Of Ottawa, Université D'Ottawa / University Of Ottawa
2013
This doctoral thesis assesses the impacts of the price policy that aims to set a price for carbon in Canada and analyzes the effects of an emissions cap on the welfare of the current and future generations and energy input substitution. In Essay One, a four-stage game is modeled to formulate the price policy and study its impacts. The main result is that through lobbying activities, the dirty-good sector induces the government to implement a price policy of a carbon that is lower than the
more » ... ed price of carbon. The consequence of the policy is a transfer of income from the owners of the specific factor used in the production of the clean good and workers to the owners of specific factor used in the production of the dirty good. In Essay Two, an overlapping-generations model is developed to study the impacts of the climate-change policy on the welfare of the current and future generations, the dynamic path of energy and permit prices, and resource substitution. The analysis shows that intergenerational equity issue arises when the oil input is large and when polluters are free to discharge greenhouse gases into the atmosphere. On the equity ground, this result justifies government intervention. The analysis also shows that the use of renewable energy can be introduced quickly if the government implements a stringent policy on climate change. In addition, the process of resource substitution---renewable energy for fossil fuels---is a gradual process and takes place in three stages. The economy will be completely sustained by renewable energy after the stock of fossil fuels is depleted. The one-country model of Essay Two is extended into a two-country world, which is also subjected to a climate-change policy under the form of a global cap on greenhouse gases emissions. It is assumed that the emissions permits are allocated to each country according to its population and that the population of the South is higher than that of the North. The analysis shows that the North will import emissions permits and export the [...]
doi:10.20381/ruor-19757 fatcat:rm7un4cjezffhcxyegisnn7oti