General equilibrium, new markets and the economics of climate change.

Summary We analyze through the prism of general economic equilibrium theory the consequences of the opening of new markets, such as emission rights, instituted in the framework of climate change mitigation and adaptation policies. In the first chapter we introduce a theoretical framework for the analysis: an economy with extemalities and increasing returns. We establish an index formula and obtain as a corollary the existence of general pricing equilibria. In the second chapter, the opening of a rights market appears as a disturbance of this initial equilibrium situation. We then describe the changes in firms' choices that guarantee the existence of an equilibrium in the extended economy. In the third chapter, we analyze the influence of the opening of the rights market on the Pareto optimality of marginal pricing equilibria in the economy. It turns out that Pareto optima can be decentralized thanks to the fact that by setting a maximum level of pollution, the government provides the economy with a free public good consisting of the difference between this level and the situation prevailing under laissez-faire. In the last chapter, we extend the Pareto Optima decentralization problem to the case where the production capacities taken into account in the definition of optimality differ from those perceived by firms. This framework is developed to account for the apparently divergent expectations of firms and governments about the economic consequences of climate change.