IDEAS home Printed from https://ideas.repec.org/a/oup/cesifo/v57y2011i3p432-457.html
   My bibliography  Save this article

Nationally and Internationally Optimal Climate Policies: External Balances versus Environmental Preferences

Author

Listed:
  • Birgit Bednar-Friedl
  • Karl Farmer

Abstract

This article compares nationally optimal to internationally optimal (Pareto efficient) emission permit levels in a two-country overlapping generations model with national emission permit systems and the environment as a global public good. When each government maximizes its steady state economic and environmental welfare and one country is a net foreign creditor and the other one a net foreign debtor, it is nationally optimal for the creditor country with sufficiently high environmental preferences to chose a stricter permit level than the debtor country. However, the resulting Nash equilibrium permit levels are not Pareto efficient. Depending on the direction and strength of the countries' differences in external balances and environmental preferences, Pareto efficiency mandates that their permit levels are either adjusted in opposite directions or reduced in both. (JEL codes: F59; Q54; D62) Copyright The Author 2010. Published by Oxford University Press on behalf of Ifo Institute for Economic Research, Munich. All rights reserved. For permissions, please email: journals.permissions@oup.com, Oxford University Press.

Suggested Citation

  • Birgit Bednar-Friedl & Karl Farmer, 2011. "Nationally and Internationally Optimal Climate Policies: External Balances versus Environmental Preferences," CESifo Economic Studies, CESifo Group, vol. 57(3), pages 432-457, September.
    • Handle: RePEc:oup:cesifo:v:57:y:2011:i:3:p:432-457
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/cesifo/ifq020
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Birgit Bednar-Friedl, 2012. "Climate policy targets in emerging and industrialized economies: the influence of technological differences, environmental preferences and propensity to save," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 39(2), pages 191-215, May.

    More about this item

    JEL classification:

    • F59 - International Economics - - International Relations, National Security, and International Political Economy - - - Other
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • D62 - Microeconomics - - Welfare Economics - - - Externalities

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:cesifo:v:57:y:2011:i:3:p:432-457. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://edirc.repec.org/data/cesifde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.