nep-res New Economics Papers
on Resource Economics
Issue of 2020‒03‒16
three papers chosen by
Maximo Rossi
Universidad de la República

  1. New Evidence on the Soft Budget Constraint: Chinese Environmental Policy Effectiveness in Private versus SOEs By Mathilde Maurel; Thomas Pernet-Coudrier
  2. Environmental Economics: The 50th Anniversary of the Birth of This Field around the First Earth Day By Don Fullerton
  3. Strategic Climate Policies with Endogenous Plant Location: The Role of Border Carbon Adjustments By Noha Elboghdadly; Michael Finus

  1. By: Mathilde Maurel (CNRS - Centre National de la Recherche Scientifique, CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne, UP1 - Université Panthéon-Sorbonne); Thomas Pernet-Coudrier (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne, UP1 - Université Panthéon-Sorbonne)
    Abstract: This paper analyses the efficiency of a set of environmental measures introduced by the 11th FYP (Five Years Plan) in China in 2006, using a rich and unique dataset borrowed from the Ministry of Environmental Protection (MEP) and from the State Environmental Protection Agency (SEPA). The objective is to provide new evidence of the Soft Budget Constraint (SBC), which is a key concept coined by Janos Kornai. The main finding is that TCZ (Two Control Zone) cities are successful in bringing down the emission of SO2, and more importantly that this success is driven by the private sector. Sectors dominated by State-Owned Enterprises (SOEs) are less sensitive to the environmental target-based evaluation system, by a factor of 42%. We also find that one channel, through which this adjustment takes place, is Total Factor Productivity (TFP), but not in the case of SOEs. We interpret these results as pointing to the evidence of a still ongoing SBC surrounding Chinese SOEs.
    Keywords: Environmental regulation,China Kornai,Soft Budget Constraint
    Date: 2020–02
  2. By: Don Fullerton
    Abstract: How was the birth of “Environmental Economics” related to the first Earth Day fifty years ago (April 22, 1970)? This short note introduces some ideas about an amazing burst of intellectual activity from 1968 to 1974. Environmental economics was not a field of economics before this brief period, but the main field journal was up and running by the end of it. This note on “environmental economics” will be published in the forthcoming “Earth 2020: An Insider’s Guide to a Rapidly Changing Planet” by Philippe D. Tortell (Cambridge: Open Book Publishers), along with a score of other notes about the fifty years of progress on air pollution, water, climate, oceans, fish, land, forest, biodiversity, plastics, contaminants, space junk, geo-engineering, media, law, and politics.
    Keywords: environment, policy, climate, Earth Day
    JEL: Q20 Q30 Q40 Q50
    Date: 2020
  3. By: Noha Elboghdadly (University of Bath, UK); Michael Finus (University of Graz, Austria)
    Abstract: Carbon leakage and the relocation of rms is one of the main concerns of governments when choosing their climate policy. In a strategic trade model with endogenous plant location, we study the effect of border carbon adjustments (BCAs) on equilibrium emission taxes in a non-cooperative policy game between two asymmetric countries. To this end, we compare a No-BCA regime with a BCA regime for two scenarios: a simultaneous and a sequential game. Without BCAs, a “race to the bottom” is the only Nash equilibrium. In a Stackelberg equilibrium, a second less negative outcome may emerge, which constitutes a Pareto-improvement to all governments. In this “wise chicken equilibrium”, the Stackelberg leader gives in, letting his/her firms relocate in order to avoid the race-to-the-bottom equilibrium. With BCAs, the race-to-the-bottom in carbon taxes can be avoided in the Nash equilibrium and also in Stackelberg equilibria global emissions are reduced. We show that the country imposing BCAs is always better off, global welfare usually increases with BCAs, even though the country on which BCAs are imposed may be better worse off. We characterize those conditions.
    Keywords: Endogenous plant location; global emissions; emission tax competition; border carbon adjustments
    JEL: F12 F18 H23 H87 Q58
    Date: 2020–03

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