Please use this identifier to cite or link to this item: 
Year of Publication: 
Series/Report no.: 
CESifo Working Paper No. 5487
Center for Economic Studies and ifo Institute (CESifo), Munich
Most studies show that the present generation has to take the burden and reduce consumption to mitigate future climate change. However, significant climate change is due to a market failure, and corrections of market failures give possibilities of Pareto improvements. In this paper, we study the implication of Pareto improving climate policies. We use the representative consumer model RICE-10, which is a global model with different regions, to see how the benefits can be distributed across and within generations. The model shows that while the social optimum by definition is on the Pareto efficiency frontier, it is not necessary on the Pareto improving frontier, and that different combinations of present and future consumption along the Pareto improving frontier would give different combinations of capital investments and emissions. We find that all Pareto improving policies have higher total emissions than the social optimum when transfers are allowed. Without the possibility of transfers, total emissions may be lower than under the social optimum. Moreover, in this case carbon taxes differ substantially between regions for all Pareto improving policies.
Pareto improvements
climate agreements
intergenerational distribution
intragenerational distribution
Document Type: 
Working Paper
Appears in Collections:

Files in This Item:

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.