Massimo Tavoni (Fondazione Eni Enrico Mattei) Valentina Bosetti (Princeton University, Fondazione Eni Enrico Mattei and CMCC) Carlo Carraro (University of Venice, Fondazione Eni Enrico Mattei, CEPR, CESifo and CMCC)
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This paper builds on the assumption that OECD countries are (or will soon be) taking actions to reduce their greenhouse gas emissions. These actions, however, will not be sufficient to control global warming, unless developing countries also get involved in the cooperative effort to reduce GHG emissions. This paper investigates the best short-term strategies that emerging economies can adopt in reacting to OECD countries’ mitigation effort, given the common long-term goal to prevent excessive warming without hampering economic growth. Results indicate that developing countries would incur substantial economic losses by following a myopic strategy that disregards climate in the short-run, and that their optimal investment behaviour is to anticipate the implementation of a climate policy by roughly 10 years. Investing in innovation ahead of time is also found to be advantageous. The degree of policy anticipation is shown to be important in determining the financial transfers of an international carbon market meant to provide incentives for the participation of developing countries. This is especially relevant for China, whose recent and foreseeable trends of investments in innovation are consistent with the adoption of domestic emission reduction obligations in 2030.
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Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number
2009.53.
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Csóka Péter & Herings P. Jean-Jacques & Kóczy László Á. & Pintér Miklós, 2009.
"Convex and Exact Games with Non-transferable Utility,"
Research Memoranda
031, Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization.
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