PhD Oral Exam - Dana Ghandour, Economics

When studying for a doctoral degree (PhD), candidates submit a thesis that provides a critical review of the current state of knowledge of the thesis subject as well as the student’s own contributions to the subject. The distinguishing criterion of doctoral graduate research is a significant and original contribution to knowledge.

Once accepted, the candidate presents the thesis orally. This oral exam is open to the public.

Abstract

This thesis investigates the intricate relationship between environmental cooperation and trade within the context of heterogeneous countries. Comprising three essays, the research delves into (i) the impact of environmental damage heterogeneity on the stability of environmental coalitions in the presence of exogenous import tariffs, (ii) the effects of environmental damage heterogeneity on the stability of environmental coalitions in the presence of endogenous import tariffs, and (iii) the role of myopic and farsighted carbon border adjustments (CBAs) in incentivizing environmental cooperation, exploring their impact on global welfare and emissions, as well as their potential to foster convergence of environmental standards among heterogeneous countries.

In the first essay, a static three-country model is employed to analyze the stability of partial and global International Environmental Agreements (IEAs) among environmentally heterogeneous trading partners. The study explores the trade-offs faced by governments, balancing the enforcement of emissions reductions through higher taxes against the potential consequences of noncooperation in the form of higher exogenous export tariffs. The main findings demonstrate that the grand coalition remains stable across various levels of environmental damage heterogeneity while generating environmental and welfare gains, under certain conditions. However, at higher levels of heterogeneity, the stability of the grand coalition becomes more fragile and increasingly sensitive to exogenous tariffs.

Building upon these insights, the second essay introduces an endogenous solution to the static three-country model, incorporating endogenous import tariffs. The research identifies conditions under which the grand coalition remains stable, showcasing environmental and welfare gains across varying levels of environmental damage heterogeneity. The study reveals that as market sizes expand, the grand coalition transitions from generating both environmental and overall welfare gains to primarily fostering only overall welfare gains.

The third essay shifts focus to the implementation of unilateral Carbon Border Adjustments (CBAs), exemplified by the European Union’s Carbon Border Adjustment Mechanism (CBAM). Investigating the effects of CBAs in a two-country trade model with varying environmental damage parameters, the study assesses their impact on global welfare and emissions. Novel considerations include the time sensitivity of CBAs, distinguishing between farsighted and myopic approaches, and exploring the potential for retaliation in myopic CBAs. Results show that farsighted CBAs can generate environmental and welfare gains under specific conditions, while myopic CBAs without retaliation offer potential avenues for cooperation, irrespective of environmental damage heterogeneity.

Collectively, these essays contribute valuable insights into the intricate interplay of environmental cooperation, trade dynamics, and policy mechanisms, shedding light on the challenges and opportunities presented by environmental damage heterogeneity in the pursuit of a stable environmental coalition.