Carbon Policy and the Structure of Global Trade

Edward Balistreri, Christoph Boehringer and Thomas F. Rutherford
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Christoph Boehringer: University of Oldenburg
Thomas F. Rutherford: University of Wisconsin - Madison
Authors registered in the RePEc Author Service: Christoph Böhringer

No 57 / 2015, ZenTra Working Papers in Transnational Studies from ZenTra - Center for Transnational Studies

Abstract: Alternative perspectives on the structure of international trade have important implications for the evaluation of climate policy. In this paper we assess climate policy in the context of three important alternative trade formulations. First is a Heckscher‐Ohlin model based on trade in homogeneous products, which establishes the traditional neoclassical view on comparative advantage. Second is an Armington model based on regionally differentiated goods, which constitutes a popular specification for numerical simulations of trade policy. Third is a Melitz model based on monopolistic‐competition and firm heterogeneity. This heterogeneous‐firms framework is adopted in many contemporary theoretic and empirical investigations in international trade. As we show in this paper, the three alternative trade formulations have important implications for the assessment of climate policy with respect to competitive effects for energy‐intensive production (and hence carbon leakage) as well as the transmission of policy burdens across countries.

Keywords: Heterogeneous firms; carbon leakage; competitiveness (search for similar items in EconPapers)
JEL-codes: F12 F18 Q54 Q56 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2015-10, Revised 2015-10
New Economics Papers: this item is included in nep-ene, nep-env and nep-int
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https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2678871 First version, 2015 (application/pdf)

Related works:
Journal Article: Carbon policy and the structure of global trade (2018)
Working Paper: Carbon policy and the structure of global trade (2015)
Working Paper: Carbon policy and the structure of global trade (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:zen:wpaper:57

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