Economy, energy, and the environment: A general equilibrium model of heterogeneous demand and extraction in natural resources

Since carbon dioxide is considered a main cause of global warming, controlling carbon dioxide emissions could mitigate the effects on global warming. There are two broadly defined paradigms to analyze the economic impacts of emissions controls. One is an economic approach that uses top-down models. It focuses on the macroeconomic aspects of the impacts, such as damages as a percentage of gross world products or a discounted sum of utility of real per capita consumption. The other is a technology approach that uses bottom-up engineering models. It focuses on technology assessment and interactions in energy behavior.; Given that each individual approach has shortcomings, this dissertation presents a modeling approach that incorporates optimal growth theory, general circulation models (GCMs), and endogenous substitution between energy resources. This two-sector, multiple-energy general equilibrium model represents interactions among different sectors and energy resources. The model yields a set of necessary conditions for an economy that govern the optimal allocation of resources between sectors, resource use patterns in the sectors, and the transition path to a steady state.; A simulation shows that a pattern of an energy use sequence in a capital sector is similar to one in a consumption sector. The sequence is basically gas, oil, coal, and solar energy, while gas is used only in the consumption sector. Coal is introduced earlier in the consumption sector than in the capital sector, while solar energy is introduced earlier in the capital sector than in the consumption sector.; The calculated change in global mean surface temperature relative to the base period of 1865 is presented as a result of optimizing possible damages from global warming and abatement costs. The temperature change reaches a maximum (6.4 degrees C) in the year 2315 and then declines.; The simulation also presents an optimal trajectory of carbon emissions and the corresponding optimal carbon tax rate. The carbon tax lasts at least until the year 2185. However, since change in temperature lags behind carbon stock in the atmosphere, the maximum carbon tax occurs before the maximum carbon stock. It is reached between the year 2185 and 2315.