Co2 Concentration Limits, the Costs and Benefits of Control, and the Potential for International Agreement

Abstract

In this paper, we use the two region CETA-M model to explore some related issues raised by the current interest in CO2 concentration targets as a possible climate change policy objective. First, we identify possible cost and benefit assumptions that would make particular concentration ceilings optimal. Next, we explore the acceptability to both regions of various burden sharing agreements, given particular cost and benefit assumptions. Lastly, we inquire whether the control effort and burden sharing rules may reasonably be negotiated independently.

JEL Classification: Q28, Q38