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Limiting Emissions and Trade: Some Basic Ideas

In: The Design and Implementation of U.S. Climate Policy

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  • Kala Krishna

Abstract

The computable general equilibrium models used in the literature tend to be a bit of a black box. This paper provides some intuition behind what goes on in these black boxes by laying out a simple general equilibrium model and intuitively explaining what lies behind the demand for emissions. It traces out how a reduction in total emissions allowed in one country aspects the general equilibrium and the determinants of the extent of leakage in the model as well as more generally. It concludes with some implications for policy.

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This chapter was published in:

  • Don Fullerton & Catherine Wolfram, 2012. "The Design and Implementation of U.S. Climate Policy," NBER Books, National Bureau of Economic Research, Inc, number full10-1.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 12154.

    Handle: RePEc:nbr:nberch:12154

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    1. Boehringer Christoph & Fischer Carolyn & Rosendahl Knut Einar, 2010. "The Global Effects of Subglobal Climate Policies," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(2), pages 1-35, December.
    2. Warwick J. McKibbin & Peter J. Wilcoxen, 2009. "The Economic And Environmental Effects Of Border Tax Adjustments For Climate Policy," CAMA Working Papers 2009-09, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    3. Svetlana Demidova & Kala Krishna & Hiau Looi Kee & Ivan Cherkashin, 2009. "Firm Heterogeneity and Costly Trade: A New Estimation Strategy and Policy Experiments," 2009 Meeting Papers 1199, Society for Economic Dynamics.
    4. Atkinson, Giles & Hamilton, Kirk & Ruta, Giovanni & Van Der Mensbrugghe, Dominique, 2010. "Trade in'virtual carbon': empirical results and implications for policy," Policy Research Working Paper Series 5194, The World Bank.
    5. Grubb, M. & Neuhoff, K., 2006. "Allocation and competitiveness in the EU emissions trading scheme: policy overview," Cambridge Working Papers in Economics 0645, Faculty of Economics, University of Cambridge.
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    Cited by:
    1. Harun Onder, 2012. "Trade and Climate Change : An Analytical Review of Key Issues," World Bank Other Operational Studies 10036, The World Bank.

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