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Climate Change and the Representative Agent

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  • Richard Howarth

Abstract

The artifice of an infinitely-lived representative agent iscommonly invoked to balance the present costs and future benefitsof climate stabilization policies. Since actual economies arepopulated by overlapping generations of finite-lived persons,this approach begs important questions of welfare aggregation.This paper compares the results of representative agent andoverlapping generations models that are numerically calibratedbased on standard assumptions regarding climate--economyinteractions. Under two social choice rules -- Pareto efficiencyand classical utilitarianism -- the models generate closelysimilar simulation results. In the absence of policies toredistribute income between present and future generations,efficient rates of carbon dioxide emissions abatement rise from15 to 20% between the years 2000 and 2105. Under classicalutilitarianism, in contrast, optimal control rates rise from 48 to 79% this same period. Copyright Kluwer Academic Publishers 2000

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Bibliographic Info

Article provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

Volume (Year): 15 (2000)
Issue (Month): 2 (February)
Pages: 135-148

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Handle: RePEc:kap:enreec:v:15:y:2000:i:2:p:135-148

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Web page: http://www.springerlink.com/link.asp?id=100263

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Keywords: climate change; overlapping generations models;

References

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  1. Burton, P.S., 1991. "Intertemporal Preferences and Intergenerational Equity Considerations in Optimal Resource Harvesting," Department of Economics at Dalhousie University working papers archive 91-06, Dalhousie, Department of Economics.
  2. Richard B. Howarth, 1996. "Climate Change And Overlapping Generations," Contemporary Economic Policy, Western Economic Association International, vol. 14(4), pages 100-111, October.
  3. Manne, Alan S, 1995. "The rate of time preference : Implications for the greenhouse debate," Energy Policy, Elsevier, vol. 23(4-5), pages 391-394.
  4. William R. Cline, 1992. "Economics of Global Warming, The," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 39.
  5. Marini Giancarlo & Scaramozzino Pasquale, 1995. "Overlapping Generations and Environmental Control," Journal of Environmental Economics and Management, Elsevier, vol. 29(1), pages 64-77, July.
  6. GUNTER Stephan & GEORG MÜLLER-FÜRSTENBERGER & PASCAL Previdoli, 1997. "Overlapping Generations or Infinitely-Lived Agents: Intergenerational Altruism and the Economics of Global Warming," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 10(1), pages 27-40, July.
  7. Mourmouras, Alex, 1993. "Conservationist government policies and intergenerational equity in an overlapping generations model with renewable resources," Journal of Public Economics, Elsevier, vol. 51(2), pages 249-268, June.
  8. Howarth, Richard B, 1998. " An Overlapping Generations Model of Climate-Economy Interactions," Scandinavian Journal of Economics, Wiley Blackwell, vol. 100(3), pages 575-91, September.
  9. Alan P. Kirman, 1992. "Whom or What Does the Representative Individual Represent?," Journal of Economic Perspectives, American Economic Association, vol. 6(2), pages 117-136, Spring.
  10. Golombek, Rolf & Hagem, Cathrine & Hoel, Michael, 1995. "Efficient incomplete international climate agreements," Resource and Energy Economics, Elsevier, vol. 17(1), pages 25-46, May.
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Citations

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Cited by:
  1. Maik T. Schneider & Christian Traeger & Ralph Winkler, 2010. "Trading Off Generations: Infinitely-Lived Agent Versus OLG," CER-ETH Economics working paper series 10/128, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
  2. Escapa García, Marta & Ansuategui Cobo, José Alberto & Pérez, Azucena, 2003. "International and Intergenerational Dimensions of Climate Change: North-South Cooperation in an Overlapping Generations Framework," IKERLANAK 2003-06, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
  3. Alberto Ansuategi & Marta Escapa, 2004. "Is international cooperation on climate change good for the environment?," Economics Bulletin, AccessEcon, vol. 17(7), pages 1-11.
  4. repec:ebl:ecbull:v:17:y:2004:i:7:p:1-11 is not listed on IDEAS
  5. Schneider, Maik T. & Traeger, Christian P. & Winkler, Ralph, 2012. "Trading off generations: Equity, discounting, and climate change," European Economic Review, Elsevier, vol. 56(8), pages 1621-1644.
  6. Kavuncu, Yusuf Okan & Knabb, Shawn D., 2001. "An Intergenerational Cost-Benefit Analysis of Climate Change," University of California at Santa Barbara, Economics Working Paper Series qt72v881dd, Department of Economics, UC Santa Barbara.
  7. Leila Davis & Peter Skott, 2011. "Positional goods, climate change and the social returns to investment," UMASS Amherst Economics Working Papers 2011-24, University of Massachusetts Amherst, Department of Economics.

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