Essays on environmental policies, corruption, and energy

• Main Author: Baksi, Soham.
• Format: Others
• Language: en
• Published: McGill University 2005
• Subjects: Pollution > Taxation.; Free trade.; Corruption.; Labels.; Energy consumption.
• Online Access: http://digitool.Library.McGill.CA:80/R/?func=dbin-jump-full&object_id=100316

This thesis consists of four essays. The first essay looks at pollution taxation under capital mobility, and analyzes the role of pre-commitment by countries to their pollution tax rate. A polluting firm sells its product in two countries, and can locate and produce in a single country or in both countries. Due to the discrete-choice nature of the firm's location problem, the countries' welfare functions are discontinuous in their pollution tax rate. We show that when the countries cannot pre-commit to their pollution tax, the firm can still engender tax competition between them by strategically locating in both the countries. Moreover, pre-commitment pollution taxation may not be welfare improving for the countries, although it always makes the firm better off. === The second essay studies the effect of liberalization on corruption. Corruptible inspectors enforce an environmental regulation on firms, and are monitored by an honest regulator. Liberalization not only increases the variety of goods and the marginal utility of accepting a bribe, but also puts pressure on the regulator to curb corruption. The interaction of these two effects can cause corruption to initially increase with liberalization, and then decrease beyond a threshold. Moreover, equilibrium corruption is lower when the regulator is able to pre-commit to her monitoring frequency. === The third essay analyzes optimal labeling (information revelation) procedures for hidden attributes of credence goods. Consumers are heterogeneous in their preference for the hidden attribute, and producers can either self-label their products, or have them certified by a third party. The government can impose self or third-party labeling requirements on either the "green" or the "brown" producers. When corrupt producers can affix spurious labels, the government needs to monitor them. A mandatory self-labeling policy is shown to generally dominate mandatory third-party labeling. === The fourth essay develops formulas for computing the economy-wide energy intensity decline rate by aggregating sectoral energy efficiency improvements, and sectoral shifts in economic activities. The formulas are used to (i) construct plausible scenarios for the global rate of energy intensity decline, and (ii) show the restraining role of the "electricity generation" sector on the energy intensity decline rate.