Where-to-Abate and Where-to-Invest Flexibility: An Integrated Assessment Analysis of Climate Change

Stephan, Gunter; Müller-Fürstenberger, Georg (August 2000). Where-to-Abate and Where-to-Invest Flexibility: An Integrated Assessment Analysis of Climate Change (Diskussionsschriften 00-01). Bern: Universität Bern, Volkswirtschaftliches Institut

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Within the framework of a dynamic Computable General Equilibrium model this paper analyses the impact of trade restrictions on regional rates of return on capital, marginal costs of abatement and optimal climate policy. It will be shown that regional differences both in marginal costs of abatement and in the marginal productivity of capital are driven by market imperfection. With restrictions on international trade, the industrialized countries of the North exhibit higher marginal costs of abatement and a lower marginal productivity of capital than the developing nations of the South. Free trade not only in carbon emission rights but also in capital increases conventional welfare but stimulates carbon dioxide emissions which are not completely offset by efficiency gains in abatement. Nevertheless, depending upon the choice of the discount rate some kind of an invariance result is observed.

Item Type:

Working Paper

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Economics > Institute of Economics > Microeconomics
03 Faculty of Business, Economics and Social Sciences > Department of Economics > Institute of Economics

UniBE Contributor:

Stephan, Gunter and Müller-Fürstenberger, Georg

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics

Series:

Diskussionsschriften

Publisher:

Universität Bern, Volkswirtschaftliches Institut

Language:

English

Submitter:

Aline Lehnherr

Date Deposited:

23 Apr 2020 10:40

Last Modified:

06 Aug 2020 14:18

JEL Classification:

F21, Q25

BORIS DOI:

10.7892/boris.142013

URI:

https://boris.unibe.ch/id/eprint/142013

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