Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/46279
Authors: 
Eichner, Thomas
Pethig, Rüdiger
Year of Publication: 
2010
Series/Report no.: 
CESifo working paper: Energy and Climate Economics 3232
Abstract: 
Scientific expertise suggests that mitigating extreme world-wide climate change damages requires avoiding increases in the world mean temperature exceeding 2° Celsius. To achieve the two degree target, the cumulated global emissions must not exceed some limit, the so-called global carbon budget. In a two-period two-country general equilibrium model with a finite stock of fossil fuels we compare the cooperative cost-effective policy with the unilateral cost-effective policy of restricting emissions to the global carbon budget. In its simplest form, the cost-effective global policy is shown to consist of a joint emission trading scheme in the first period (only). In sharp contrast, subglobal cost-effective regulation may require the abating country to tax its first-period consumption and to tax or subsidize its emissions in the first and/or second period.
Subjects: 
carbon emissions
carbon budget
cooperative
unilateral
cost-effective regulation
JEL: 
H21
H23
Q54
Q58
Document Type: 
Working Paper

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