Semester

Spring

Date of Graduation

2013

Document Type

Dissertation

Degree Type

PhD

College

Chambers College of Business and Economics

Department

Economics

Committee Chair

Stratford Douglas

Committee Co-Chair

Aarbinda Basistha

Committee Member

Thirimachos Bourlai

Committee Member

Feng Yao

Committee Member

Qipeng Zheng.

Abstract

This dissertation provides a new method of measuring efforts by manufacturing industries to reduce their emissions by curtailing electricity consumption. Employing comprehensive firm-level data from the National Manufacture Annual Surveys of South Korea and Thailand, I construct the measure from estimates of revenue functions by industry. The data consists of firms from more than 20 industries in each year from 1982 to 2005 for Korea and from 2001 to 2008 for Thailand. With a total of more than two million observations, I estimate revenue functions for each industry and year. Here, I use three inputs: number of employees(L), fixed asset stock(K), and electricity consumption(E) and two types of functional forms to represent each industry's revenue function.;Second, under market competitive condition, I find that profit maximizing firms deviated their level of electricity usage in production from the profit-maximizing level during the time period for both countries, and I develop a theoretical framework to explain this behavior. Then, I tested the theory using my empirical models. Results support the notion of a hidden environmental value expressed by firms in the form of voluntary deviations from profit-maximizing levels of input demand. The measure used is the gap between the marginal revenue product of electricity and its price. This gap should increase with income, consistent with the Environmental Kuznets Curve literature. My current model provides considerable support for this proposition. Estimates indicate, in most industries, a negative relationship between per-capita income and emissions.;In the final section of the dissertation, I consider the equitable distribution of emissions reduction burden under an international agreement such as the reduction effort, Kyoto Protocol. Both developed and developing countries have to cut their emissions to a specific reduction percentage target. Domestically, I present two extreme scenarios. In the first scenario, manufacturing industries take full responsibility for emissions reductions by curtailing their use of energy without any subsidies from the government.;Revenue function estimates provide measures of the differential costs imposed on different industries by emissions reductions. In the second scenario, emissions reductions are achieved by changing the mix of electricity generation technologies used by the power generation sector within the country. For the international case, I focus on the fairness of emission reduction responsibility among countries. To be fair to countries at different levels of development and with different rate of carbon emissions, I propose a new method to adjust the timing and rates of emission reductions based on a lifetime cumulative emission per capita.

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