Who Should Abate Carbon Emission? An International Perspective
7 Pages Posted: 9 Apr 2009
Date Written: 1994
Abstract
We review the optimal pattern of carbon emission abatements across countries in at simple muIti-country world. We model explicitly (with the model in Chichilnisky, 1993b) the fact that the atmosphere is a public good. Within this framework we establish conditions for it to he necessary for optimality that the marginal cost of abatement be the same in all countries. These conditions are quite restrictive. and amount to either ignoring distributional issues between countries or operating within at framework within which lump-sum transfers can be made between countries. These results have implications for the use of tradeable emission permits, which as normally advocated will lend to the equalization of marginal abatement costs across countries. The observation that the atmosphere is a public good implies that we may need to look at a Lindahl equilibrium rather than a Walrasian equilibrium in tradeable permits.
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