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Efficiency and Distribution in Computable Models of Carbon Emission Abatement

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  • Joaquim Oliveira Martins
  • Peter Sturm

Abstract

The separability between efficiency and equity is an underlying assumption in most computable general equilibrium (CGE) models used to assess the costs of carbon abatement. Chichilnisky and Heal (1994) have generated a debate on both the analytical correctness of this hypothesis as well as its precise policy implications. This technical note aims to clarify the determinants of cost efficiency in standard CGE abatement models. Some simulations are provided illustrating the separability property between an efficient outcome and the distribution of income across countries. In the context of an optimal abatement model, it is also shown under which conditions equity and efficiency are not separable anymore ... La séparabilité entre équité et efficacité économique est l’hypothèse de base dans la plupart des modèles d’équilibre général calculable (MEGC) utilisés pour évaluer les coûts de réduction des emissions de carbone. Chichilnisky et Heal (1994) ont provoqué un débat à la fois sur l’exactitude de cette hypothèse et ses implications pour la politique économique. Cette note cherche à clarifier les déterminants de l’efficacité économique dans les MEGC destinés à évaluer les coûts de réduction des émissions de carbone. Des simulations numériques sont fournies à fin d’illustrer la propriété de séparabilité entre efficacité et la distribution des revenus. L’étude montre aussi dans le contexte d’un modèle de reduction optimale des émissions, sous quelles conditions équité et efficacité ne sont plus séparables ...

Suggested Citation

  • Joaquim Oliveira Martins & Peter Sturm, 1998. "Efficiency and Distribution in Computable Models of Carbon Emission Abatement," OECD Economics Department Working Papers 192, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:192-en
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    File URL: http://dx.doi.org/10.1787/840432141271
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    Cited by:

    1. Jean-Marc Burniaux & Joaquim Oliveira Martins, 2012. "Carbon leakages: a general equilibrium view," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 49(2), pages 473-495, February.

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