Elies Lucio

By empowering conflicts, deforestation and intimidation of the legal economy, illegal mining of gold constitutes a challenging puzzle for policymakers. Because provenance is only a claim, it enters the global market avoiding regulation. In this paper, I study how trade resists policy efforts to stop it and I develop a blockchain-based certification aimed at hindering it. To model its resilience, I model a coerced jungle economy in which an armed group controls the sale of both the inputs and outputs. The trade powers through a policy shock because of households' required subsistence level of wealth. The intermediary can recover margins both by adjusting prices in the jungle and by re-allocating the metal via its selling mechanism. I evidence the re-allocation by looking at the receipts following the policy-driven demand shock. These generate a price effect on regulated bids which transmits imperfectly, and up to a ceiling, to receipts due to laundering and the level of competing bids. Blockchain breaks the cycle by ensuring provenance up to a minting node; leaking out of a legal mine becomes impossible. Leakage at the mine level is looked at through the lens of contracting and auditing which determine the blockchain's credibility. At the macro level, the blockchain segmentation breaks the pooling of innovation and allows for public funding of a clean mining industry. At the micro level, it changes incentives in affected countries to take back control of their jungle to fund a legal mining industry. Macro and micro work as scissors to stop the illegal mining industry.

A carbon price changes both the return to emitting and the value of an emissions allowance used as collateral. We study how these two channels affect the design of carbon taxes, tradable emissions caps and price collars, which set a price floor and ceiling.

Under jointly concave production, investment can complement or substitute for emissions. After optimising investment, firms differ in how they value emissions. We derive an exact welfare comparison between price and quantity instruments, governed by curvature and the covariance of shocks. Production complementarity alone does not determine the preferred instrument. For finite uncertainty, the globally optimal price collar can be found through a finite set of convex quadratic programmes.

We then allow firms to finance investment before receiving operating revenue. A higher carbon price can increase investment by raising collateral value, even when the direct incentive effect points the other way. Financing thresholds and a cash-equivalence result show when the share of allowances sold at auction and the timing of transfers affect real decisions. A reproducible example of joint policy design shows how the preferred revenue rule changes when public bridge finance is available. Forest conversion and Brazilian institutions identify possible applications and the data needed to assess the model.

A shared carbon market gives a firm in the South a buyer for emissions allowances it does not use. This opportunity changes the return to clean investment and, once sales are paid, the funds available to finance it. We develop a North–South investment model in which firms own emissions rights, the North advances technology and the South chooses whether to adopt cleaner or more polluting technology.

Current production and allowance prices are determined together. Firms choose investment and how much profit to retain, subject to receiving cash after investment has been paid for. We identify when cleaner production frees allowances for sale, when additional exports raise revenue despite a lower allowance price, and when Southern productivity catches up with an advancing Northern technology frontier.

A fully solved finite investment economy shows that connecting markets can increase both Southern clean productivity and the speed of relative catch-up. Under separate markets, the same cash injection instead finances polluting investment. Other parameter choices can also direct extra trading income towards polluting production. The findings are therefore conditional: the price incentive, rents from initially allocated emissions rights and later sale proceeds need to be understood separately.