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Renewable versus nonrenewable energy for Canada in a free trade agreement with China

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  • Thompson, Henry
  • Toledo, Hugo

Abstract

This paper predicts the adjustments in energy sources in Canada entering a free trade agreement FTA with China in an applied specific factors model including agriculture, manufacturing, services, and nonrenewable energy sectors. FTA price change scenarios lead to adjustments in sector outputs and capital returns, wages for five skill groups, and the price of electricity. Electricity is tied to renewable energy and treated as a factor of production. Increases in outputs, capital returns, and wages gains are offset by declines in manufacturing and the operator-handler wage. The declining demand for electricity will favor the nonrenewable sector over renewable energy.

Suggested Citation

  • Thompson, Henry & Toledo, Hugo, 2022. "Renewable versus nonrenewable energy for Canada in a free trade agreement with China," Energy Economics, Elsevier, vol. 105(C).
    • Handle: RePEc:eee:eneeco:v:105:y:2022:i:c:s0140988321005661
    DOI: 10.1016/j.eneco.2021.105716
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    References listed on IDEAS

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    1. Henry Thompson, 1995. "Free trade and income redistribution in some developing and newly industrialized countries," Open Economies Review, Springer, vol. 6(3), pages 265-280, July.
    2. Akay, Gokhan H., 2012. "Trade and factor returns: Empirical evidence from U.S. economy," International Review of Economics & Finance, Elsevier, vol. 21(1), pages 77-86.
    3. Mussa, Michael, 1974. "Tariffs and the Distribution of Income: The Importance of Factor Specificity, Substitutability, and Intensity in the Short and Long Run," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1191-1203, Nov.-Dec..
    4. Wang, Fei & Xia, Junjie & Xu, Jiajun, 2020. "To upgrade or to relocate? Explaining heterogeneous responses of Chinese light manufacturing firms to rising labor costs," China Economic Review, Elsevier, vol. 60(C).
    5. Paul A. Samuelson, 1953. "Prices of Factors and Goods in General Equilibrium," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 21(1), pages 1-20.
    6. Thompson, Henry, 1997. "Free trade and income redistribution across labor groups: Comparative statics for the U.S. economy," International Review of Economics & Finance, Elsevier, vol. 6(2), pages 181-192.
    7. Mayer, Wolfgang, 1974. "Short-Run and Long-Run Equilibrium for a Small Open Economy," Journal of Political Economy, University of Chicago Press, vol. 82(5), pages 955-967, Sept./Oct.
    8. Gilbert, John & Oladi, Reza, 2009. "Capital specificity, imperfect labor mobility and growth in developing economies," International Review of Economics & Finance, Elsevier, vol. 18(1), pages 113-122, January.
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    Cited by:

    1. Yanyong Hu & Zhixiao Zou & Jiaxi Wu & Zheng Meng, 2024. "Double-edged sword: China’s free trade agreements reinforces embodied greenhouse gas transfers in agricultural products," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-13, December.

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    More about this item

    Keywords

    Canada; China; Free trade agreement; Renewable energy; Nonrenewable energy;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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