Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/171617
Authors: 
Lanz, Bruno
Rutherford, Thomas F.
Tilton, John E.
Year of Publication: 
2013
Series/Report no.: 
Economics Working Paper Series 13/174
Abstract: 
Subglobal climate policies induce changes in international competitiveness and favor a relocation of carbon-emitting activities to non-abating regions. In this paper, we evaluate the potential for CO2 abatement and the emissions `leakage' effect in the copper industry, a prominent energy-intensive trade-exposed sector. We formulate a plant-level spatial equilibrium model for copper commodities in which parameters describing the behavioral response of agents are calibrated to econometric estimates of price elasticities. We find producers and consumers to be price inelastic even in the long-run, making the copper industry unresponsive to climate policies. Monte Carlo simulations with our model based on statistical uncertainty on elasticity estimates suggest that around 30% of emissions reductions in industrialized countries would be compensated by an increase of emissions in non-abating countries.
Subjects: 
Carbon leakage
Pollution haven effect
Climate policy
International environmental agreements
International trade
Copper industry
JEL: 
F18
F55
H23
Q54
Q58
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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