On the Robustness of Marginal Abatement Cost Curves: The Influence of World Energy Prices
AbstractSince the study of Ellerman and Decaux (1998) marginal abatement cost curves (MACCs) have become one of the favorite instruments to analyze the impacts of the implementation of the Kyoto Protocol and emission trading. This paper shows that the MACC in one country depends - via the link of world energy prices - on the level of abatement in the rest of the world. The strength of the dependence is influenced by factors, such as trade elasticities and trade structures. After discussing the mechanism theoretically, the CGE model DART is used to quantify the e®ects. We show that the MACC of a region does indeed shift with changes in the abatement level in the rest of the world and that especially with low domestic abatement level the MACCs can di®er considerably.
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Bibliographic InfoPaper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1138.
Length: 27 pages
Date of creation: Jan 2003
Date of revision:
Marginal abatement costs; energy prices; computable general equilibrium model; DART;
Find related papers by JEL classification:
- C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
- D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
- F18 - International Economics - - Trade - - - Trade and Environment
- Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
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