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Welfare and Environmental Effects of Subsidies and Tariffs in North-South Trade in Renewable Energy Equipment

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  • Wei, Wenjie

Abstract

A two-country, three-good general equilibrium model is developed to examine the welfare and environmental effects for countries (North and South) of demand subsidies (a feed-in tariff) to renewable energy equipment, as well as tariffs on renewable energy equipment imports. Both North and South renewable energy equipment producers engage in Cournot duopoly competition with a homogeneous product in both countries. Both countries also produce polluting fossilfuel- generated electricity and a numeraire good. We show, inter alia, that an endogenous Northern import tariff is increasing in (independent of) a Northern (Southern) feed-in tariff premium, even if the North government does not internalize any pollution harm. A Northern feed-in tariff premium may hurt domestic environment due to a rebound effect and it may also hurt Southern welfare.1

Suggested Citation

  • Wei, Wenjie, 2014. "Welfare and Environmental Effects of Subsidies and Tariffs in North-South Trade in Renewable Energy Equipment," 2014 Conference (58th), February 4-7, 2014, Port Macquarie, Australia 165887, Australian Agricultural and Resource Economics Society.
    • Handle: RePEc:ags:aare14:165887
    DOI: 10.22004/ag.econ.165887
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    References listed on IDEAS

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    International Relations/Trade; Resource/Energy Economics and Policy;

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