Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/50148 
Authors: 
Year of Publication: 
2009
Series/Report no.: 
ESRI Working Paper No. 278
Publisher: 
The Economic and Social Research Institute (ESRI), Dublin
Abstract: 
A necessary condition of an efficient global climate change mitigation policy is to equate marginal abatement costs across world regions to ensure use of the cheapest abatement options available. The welfare economic justification for such an approach rests on lump sum transfers between regions to compensate for any unwanted distributional consequences of such a policy. I contrast this efficient solution with a second best situation in which lump sum transfers between regions are impossible. I derive that in a dynamic setting optimal taxes are different in such a case for regions with different per capita consumption. I estimate the optimal tax rates with the integrated assessment model FUND and find that optimal mitigation is less stringent when equity is explicitly considered for widely used parameter choices of a utilitarian social welfare function.
Subjects: 
climate change
JEL: 
Q54
Document Type: 
Working Paper

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