cover image: Industrial policy and global public goods provision: rethinking the environmental

Industrial policy and global public goods provision: rethinking the environmental

19 Sep 2024

I acknowledge financial and administrative support from the Fulbright Commission in Belgium, the Grantham Research Institute on Climate Change and the Environment, and the Economic and Social Research Council through the Centre for Climate Change Economics and Policy and the Programme on Productive and Inclusive Net Zero. [...] The key insight is that allowing the initially laggard country to more effectively compete with the frontier country can be beneficial for the global economy, and allowing for the use of producer subsidies can accomplish this goal while avoiding the temporary cost of protectionism. [...] 10 Note: The figure shows the share of the top 10 producers in global shipments of solar PV generation capacity for the years 2000 (when the top 10 captured 88% of global market share), 2005, 2010, and 2015 (when the share of the top 10 had declined to 53%). [...] In the absence of positive externalities, these rents ensure that the benefits from trading in the first stage (comprising higher consumer surplus in Stage 1, as well as rents collected in both stages) always outweigh the gains in consumer surplus in Stage 2 if the laggard has caught up. [...] The figures illustrate the opposing effects of trade on profit and welfare: the further country L is from the techno- logical frontier, the more A = {1,1} reduces overall welfare as compared to A = {0,1}, and the more it increases firm F’s profits (firm L’s profits are not plotted as the ratio is always 0).
Pages
48
Published in
United Kingdom

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