Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/30591
Authors: 
Bednar-Friedl, Birgit
Farmer, Karl
Year of Publication: 
2009
Series/Report no.: 
CESifo working paper 2764
Abstract: 
This paper investigates the welfare costs of unilateral versus internationally coordinated emission permit policies in a two-country overlapping generations model with producer carbon emissions. We show that, for a net foreign debtor country, the domestic welfare costs of a unilateral domestic permit policy are larger than of an internationally coordinated policy if the world economy is dynamically efficient. From the perspective of a net foreign debtor country that has withdrawn from the Kyoto Protocol, an internationally coordinated permit policy is dominated by climate political inaction also in the post-Kyoto era since bearing the costs of foreign actionism is cheaper, in terms of welfare, than agreeing on international policy coordination - unless the world economy becomes dynamically inefficient.
Subjects: 
emission permit policies
trade
overlapping generations
welfare
JEL: 
Q52
Q54
D91
Document Type: 
Working Paper

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