Who Should Abate Carbon Emissions? A Note
Economists commonly believe that failure to equalize the marginal cost of carbon abatement across countries implies a loss of global efficiency. Chichilnisky and Heal [(1994), Economic Letters 44, 444] first challenged this consensus a decade ago, demonstrating that, in general, efficiency does not require equalizing marginal abatement costs. This note revisits that important debate. It provides the missing intuition behind Chichilnisky and Heal’s surprising result, explains what critical assumption gives rise to their result, and clarifies the role a social welfare function plays in their model. The implications of Chichilnisky and Heal’s result are increasingly important, given international debate over the preferential role given to developing countries in the Kyoto Protocol and the role those countries will play in future climate negotiations. Copyright Springer Science+Business Media, Inc. 2006
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Volume (Year): 35 (2006)
Issue (Month): 2 (October)
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- Chichilnisky, Graciela & Heal, Geoffrey, 1994.
"Who should abate carbon emissions? : An international viewpoint,"
Elsevier, vol. 44(4), pages 443-449, April.
- Graciela Chichilnisky & Geoffrey Heal, 1993. "Who Should Abate Carbon Emissions? An International Viewpoint," NBER Working Papers 4425, National Bureau of Economic Research, Inc.
- Donald J. Brown & Geoffrey Heal, 1979. "Equity, Efficiency and Increasing Returns," Review of Economic Studies, Oxford University Press, vol. 46(4), pages 571-585.