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Joseph Shapiro (UC Berkeley) will present:

"The Environmental Bias of Trade Policy"

at 12:15pm on Tuesday, November 6, 2018 in (051 Buchanan) Volanakis - TUCK

Lunch will be served at noon.

If you will be attending the Lunch Seminar please RSVP to Galen Muskat at TUCK so he can order the appropriate amount of food.

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Please sign up for a meeting, or dinner at:

https://docs.google.com/spreadsheets/d/1MgrvbZjM3WxXdI1SjQ_lYvcNIe_DhjmQHbM_EDhWuAo/edit?usp=sharing

ABSTRACT:

This paper documents a new fact, then analyzes its causes and consequences: in most countries and years, import tariffs and non-tariff barriers are substantially lower on dirty than clean industries, where an industry's "dirtiness" is defined as its carbon dioxide (CO₂) emissions per dollar of output. This difference in trade policy creates a global implicit subsidy to CO₂ emissions in internationally traded goods, of up to $30 per ton of CO₂, and so contributes to climate change. This global implicit subsidy to CO₂ emissions totals over $100 billion annually. The greater protection of downstream industries, which are relatively clean, substantially accounts for this implicit subsidy. The downstream pattern can be explained by a model where industries lobby for low tariffs on their inputs but final consumers are poorly organized. A quantitative general equilibrium model suggests that harmonizing trade policy between clean and dirty industries could reduce global CO₂ emissions without decreasing the gains from trade.