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theses

This thesis is applied microeconomics in climate change and environmental economics. Climate scientists express strong consensus on anthropogenic climate change. Although science is based on "hard facts", there have been cases where scientists have been found to misrepresent data, or to hide relevant facts. Since politicians in general have no scientific background and they often suspect that scientific data could be misrepresented or manipulated, it is worthwhile to study the strategic interaction between a climate scientist and a politician who suspects the scientist may be manipulating the data. This thesis is a rigorous analysis of these controversial topics by applying formal game-theoretic models and empirical techniques. In Chapter 2, I develop a cheap-talk game of the three parties associated with climate change: the government, the climate scientist, and the median voter. I show that a credibility gap is created between the scientist and the government if the preference of the scientist is not perfectly aligned with that of the government. In the case where climate change is likely to be a serious problem, the credibility gap leads to too much burning of fossil fuels. The credibility gap is eliminated and the ex-ante social welfare is maximized if and only if the scientist's preference is perfectly aligned with that of the government. This is endogenously achieved when the government is allowed to appoint its optimal scientist without election concerns. In the case where the government has election concerns, if the median voter perceives an alarming message from the climate scientist, then even a "right-wing" government must choose an aggressive climate change policy to avoid losing the election. Accordingly, it will prefer to appoint a climate scientist who is unlikely to send an alarming message. Thus the government deliberately creates a credibility gap which may cause distorted climate change policies in a democratic society. Nevertheless, the model predicts that countries with more democratic political institutions will have climate change policies that are more targeted towards renewable energy. In Chapter 3, I test this theoretical prediction. In the analysis of international panel data of 1980-2012, I find that a one-unit increase in the Polity II index is associated with approximately 11-13 percent increase in the proportion of electricity due to renewable energy. I also find that a one-unit increase in the Polity II index is associated with approximately 3 percent decrease in the CO2 emissions per capita. That is, countries with more democratic institutions practice more environment-friendly policies; and they also produce lower CO2 emissions. I further study how the population environmental preferences, as measured by the LCV scores, influence state governors to become more concerned about the environment. From a U.S. panel data in the period of 1971-2007, I find the Republican state governors increase the environmental expenditure per capita by approximately 1.5 percent as the Democrat LCV scores increase by 1 percent; and they increase the environmental expenditure per capita by 4.8 percent as the Republican LCV scores decrease by 1 percent. That is, Republican governors respond positively to the LCV scores of the Democrats, but not to Republican LCV scores. In Chapter 4, I extend the strategy of manipulating conflict developed by Baliga and Sj¨ostr¨om (2012) and apply it to climate-change politics between two asymmetric decision-makers under incomplete information. The decision-makers choose progressive or conservative actions towards climate change. A decision-maker from a country with greater damage from climate change is more likely to be progressive than a country with lesser damage. Climate scientists can manipulate this decision-making by sending publicly observed cheap-talk messages. The likelihood of both players choosing progressive action on climate change decreases if both players are “coordination” types and the scientist is conservative. The conservative scientist can cause this by sending skeptical messages that trigger a spiral of climate change skepticism. This reduces the welfare of both decision-makers. If both players are opportunistic types, a progressive scientist can send alarming messages that cause the decision-maker from the country with greater damage from climate change to be more progressive. This reduces his welfare but benefits the other decision-maker. I show that there does not exist any communication equilibrium for either kind of scientist, for any other combination of player types.

ETD_7671

Ph.D.

Includes bibliographical references

by Youngseok Park

doi:10.7282/T3H70J4K

ETD doctoral

The author owns the copyright to this work.