Title of Dissertation: national renewable energy policy

the scale effect, the technique effect, and the 
21
Grossman, Gene M., and Alan B. Krueger. 
Environmental Impacts of a North 
American Free Trade Agreement
. No. w3914. National Bureau of Economic Research, 
1991.

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34 
composition effect
. The scale effect is the increase of pollutants by the growing economic 
activities. The technique effect is the changes of technologies for production. Trade 
liberalization generates the technique effect by boosting the introduction of new 
technologies from foreign producers and by encouraging stricter environmental 
regulations under increased income level. Finally, the composition effect refers to the 
changes of composition of the economy as countries specialize in certain activities under 
trade liberalization. Grossman and Kreuger suggested that lowered trade barrier influence 
the environment by increasing these three effects. In the initial period, the scale effect 
outweighs the other two effects, but over time, the other two effects offset the scale 
effect.
The technique effect has been pointed out as a critical factor to offset the scale 
effect. Stern found that technical change was one of the main factors offsetting the scale 
effect through developing a decomposition model using sulfur emissions data.
22
Copeland and Taylor showed that the technique effect could reduce pollutants by more 
than the increase of pollutants by the scale effect.
23
Based on these results, they suggest 
that economic growth with environmentally friendly technologies could even improve the 
environment. Bruvolle and Medin also showed that technologies played a significant role 
to reduce the increase of emissions caused by the scale effect.
24
22
Stern, David I. "Explaining changes in global sulfur emissions: an econometric 
decomposition approach." 
Ecological Economics
42, no. 1 (2002): 201-220.
23
Copeland, Brian R., and M. Scott Taylor. 
Trade and the environment: Theory and 
evidence
. Princeton University Press, 2003. 
24
Bruvoll, Annegrete, and Hege Medin. "Factors behind the environmental Kuznets 
curve. A decomposition of the changes in air pollution." 
Environmental and Resource 
Economics
24, no. 1 (2003): 27-48.

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35 
Openness to international trade drives faster technology diffusion.
25
Frankel and 
Rose suggested the gains-from-trade hypothesis, which refers to the positive effect of the 
openness to trade.
26
They proposed three possible effects. First, trade can trigger 
technological innovations. Trade speed up the adoption of advanced technologies and 
best practices.
27
Second, as the public awareness of environmental issues increase, the 
environmental standards go higher. Third, multinational corporations diffuse clean 
technologies from advanced countries. 
Empirical studies on the composition effect have mixed results, while a majority 
of the studies on the technique effect showed positive effects of it. The composition 
effect is generated since the industrialized countries tend to move to light manufacturing 
from heavy manufacturing, while industrializing countries focus on heavy manufacturing. 
Suri and Chapman examined these changes by modeling the imports and the exports of 
manufactured goods with the EKC model. They found that the exports were positively 
associated with energy use, while the imports were negatively associated.
28
This 
composition effect was criticized by the claim that manufacturing activities may be 
shifted to South from North.
29
In this case, the composition effect has not contributed to 
the improvement of the environment.
25
Reppelin-Hill, Valerie. "Trade and environment: An empirical analysis of the 
technology effect in the steel industry."