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Carbon Pricing, Technology Transition, and Skill-Based Development

Kirill Borissov () and Lucas Bretschger

No 18/297, CER-ETH Economics working paper series from CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich

Abstract: We derive the optimal contributions to global climate policy when countries differ with respect to income level and pollution intensity. Countries's growth rates are determined endogenously, and abatement effciency is improved by technical progress. We show that country heterogeneity has a crucial impact on optimal policy contributions: more developed countries have to make a larger effort while less developed countries are allowed to graduate under a less stringent environmental regime. The optimal allocation of pollution per- mits depends on international trade. In the absence of international permit trade, more developed countries should receive more permits than the less developed countries but permit prices are higher in the rich countries. With international permit trade, more developed countries receive less permits than the less developed. When global distribution of physical capital is uneven and the aggregate pollution ceiling is low, poor countries receive all the permits and incomes do not converge, even with free trade.

Keywords: Climate policy; growth; abatement efficiency; policy convergence (search for similar items in EconPapers)
JEL-codes: O41 O47 Q43 Q56 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2018-10
New Economics Papers: this item is included in nep-ene, nep-env and nep-res
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Citations: View citations in EconPapers (4) Track citations by RSS feed

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Related works:
Journal Article: Carbon pricing, technology transition, and skill-based development (2019) Downloads
Working Paper: Carbon Pricing, Technology Transition, and Skill-Based Development (2018) Downloads
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