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Games of climate change with international trade

journal contribution
posted on 2023-06-08, 11:09 authored by C Kemfert, W Lise, Richard TolRichard Tol
We analyse games of greenhouse gas emission reduction in which the emissions and the emission reduction costs of one country depend on other countries' emission abatement. In an analytically tractable model, we show that international trade effects on costs and emissions can either increase or decrease incentives to reduce emissions and to cooperate on emission abatement; in some specifications, optimal emission reduction is unaffected by trade. We therefore specify the model further, calibrating it to larger models that estimate the costs of emission reduction, trade effects, and impacts of climate change. If trade effects are driven by total emission reduction costs of other countries cooperation is slightly more difficult than in the case without trade effects. If trade effects are determined by relative emission reduction efforts in other countries, cooperation becomes easier. Carbon leakage does not affect our qualitative insights, although it does change the numbers.

History

Publication status

  • Published

Journal

Environmental and Resource Economics

ISSN

0924-6460

Publisher

Springer Verlag

Issue

2

Volume

28

Page range

209-232

Department affiliated with

  • Economics Publications

Full text available

  • No

Peer reviewed?

  • Yes

Legacy Posted Date

2012-04-19

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