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Unilateral OECD policies to mitigate global climate change


  • Stephen P. A. Brown
  • Hillard G. Huntington


This article offers an alternative perspective for thinking about climate change policy when the developing countries are not participating. If industrialized countries cooperate with each other to reduce their emissions, but comply at levels below those required under the Kyoto protocol, they will have incentives to adopt policies that are more costly to the world than a carbon tax. These incentives result from terms-of-trade gains that result if conservation lowers world prices lower for fuels the industrialized countries import. We consider cases where the industrialized countries act cooperatively and non-cooperatively to achieve these gains. Because the regional terms-of-trade effects of a particular policy cancel each other at the world level, participating nations have incentives to adopt policies that are more costly to non-participants than a carbon tax that minimizes world costs.

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  • Stephen P. A. Brown & Hillard G. Huntington, 2000. "Unilateral OECD policies to mitigate global climate change," Working Papers 0003, Federal Reserve Bank of Dallas.
  • Handle: RePEc:fip:feddwp:00-03

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    References listed on IDEAS

    1. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 70(1), pages 65-94.
    2. Kydland, Finn E & Prescott, Edward C, 1982. "Time to Build and Aggregate Fluctuations," Econometrica, Econometric Society, vol. 50(6), pages 1345-1370, November.
    3. Brock, William A. & Mirman, Leonard J., 1972. "Optimal economic growth and uncertainty: The discounted case," Journal of Economic Theory, Elsevier, vol. 4(3), pages 479-513, June.
    4. Finn E. Kydland & Carlos E.J.M. Zarazaga, 2004. "Argentina's capital gap puzzle," Center for Latin America Working Papers 0504, Federal Reserve Bank of Dallas.
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    Energy policy ; Power resources;


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