Climate Change and the Representative Agent

Richard Howarth ()

Environmental & Resource Economics, 2000, vol. 15, issue 2, 135-148

Abstract: The artifice of an infinitely-lived representative agent iscommonly invoked to balance the present costs and future benefitsof climate stabilization policies. Since actual economies arepopulated by overlapping generations of finite-lived persons,this approach begs important questions of welfare aggregation.This paper compares the results of representative agent andoverlapping generations models that are numerically calibratedbased on standard assumptions regarding climate--economyinteractions. Under two social choice rules -- Pareto efficiencyand classical utilitarianism -- the models generate closelysimilar simulation results. In the absence of policies toredistribute income between present and future generations,efficient rates of carbon dioxide emissions abatement rise from15 to 20% between the years 2000 and 2105. Under classicalutilitarianism, in contrast, optimal control rates rise from 48 to 79% this same period. Copyright Kluwer Academic Publishers 2000

Keywords: climate change; overlapping generations models (search for similar items in EconPapers)
Date: 2000
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Citations: View citations in EconPapers (10)

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DOI: 10.1023/A:1008361812597

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