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The Impact of Climate Change Skepticism on Adaptation in a Market Economy

Matthew Kahn () and Daxuan Zhao ()

No 23155, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Climate change will increase the risk of temperature extremes. Induced innovation could offset some of this threat. This paper explores the demand and supply for climate adaptation innovation in a market economy. Climate change induces this innovation because the rising temperatures increase demand for self protection products and for profit firms respond to these incentives. We then augment the model to introduce climate skeptics. Such skeptics reject the claim that the world is warming and thus do not increasingly demand adaptation products. We study how the economy's rate of adaptation innovation, cross city migration, real estate pricing and the welfare of agents with rational expectations are all affected by the presence of such skeptics.

JEL-codes: Q54 R21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-env, nep-ino and nep-res
Date: 2017-02
Note: EEE
References: View references in EconPapers View complete reference list from CitEc
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Published as Matthew E. Kahn & Daxuan Zhao, 2018. "The impact of climate change skepticism on adaptation in a market economy," Research in Economics, vol 72(2), pages 251-262.

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Journal Article: The impact of climate change skepticism on adaptation in a market economy (2018) Downloads
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