TY  - JOUR
AU  - Dong,Yan
AU  - Whalley,John
TI  - Carbon Motivated Regional Trade Arrangements: Analytics and Simulations
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14880
PY  - 2009
Y2  - April 2009
UR  - http://www.nber.org/papers/w14880
L1  - http://www.nber.org/papers/w14880.pdf
N1  - Author contact info:
Yan Dong
Institute of World Economics and Politics
Chinese Academy of Social Sciences
15th Floor of CASS Building
No.5 Jianguomen Nei Avenue
Beijing, China, 100732
E-Mail: dongyan@cass.org.cn

John Whalley
Department of Economics
Social Science Centre
University of Western Ontario
London, ON N6A 5C2
CANADA
Tel: 519/661-3509
Fax: 519/661-3666
E-Mail: jwhalley@uwo.ca
AB  - This paper presents both analytics and numerical simulation results relevant to proposals for carbon motivated regional trade agreements summarized in Dong & Whalley(2008). Unlike traditional regional trade agreements, by lowing tariffs on participant’s low carbon emission goods and setting penalties on outsiders to force them to join such agreements , carbon motivated regional trade agreements reflect an effective merging of trade and climate change regimes, and are rising in profile as part of the post 2012 Copenhagen UNFCC negotiation. By adding country energy extraction cost functions, we develop a multi-region general equilibrium structure with endogenously determined energy supply. We calibrate our model to business as usual scenarios for the period 2006-2036. Our results show that carbon motivated regional agreements can reduce global emissions, but the effect is very small and even with penalty mechanisms used, the effects are still small. This supports the basic idea in our previous policy paper that trade policy is likely to be a relatively minor consideration in climate change containment.
ER  -