Intergenerational cost benefit analysis of climate change: an endogenous abatement approach
AbstractThis paper studies the intergenerational welfare effects of climate change and a control policy within a decentralized overlapping generations framework, including endogenous abatement activities. The model incorporates a profit stimulated R D with realistic market distortions to create an induced innovation structure. In this setting, a control policy has the dual role of discouraging emissions and triggering new abatement technologies. The results from numerical simulations show that the omission of entrepreneurial response to a control policy is likely to result in overestimation of costs associated with this particular policy. Although induced innovation has the potential to reduce the compliance costs with the control policy, current and near-future generations will bear some net costs. The higher the damage projected from climate change, the earlier the net benefit will arrive.
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Bibliographic InfoArticle provided by Cambridge University Press in its journal Environment and Development Economics.
Volume (Year): 12 (2007)
Issue (Month): 02 (April)
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- Da Rocha, José María & Gutiérrez Huerta, María José & Villasante, Sebastián, 2013. "Economic Effects of Global Warming under," DFAEII Working Papers DFAEII;2013-03, University of the Basque Country - Department of Foundations of Economic Analysis II.
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