Kiel Working Papers, Kiel Institute for World Economics
No 1138:
On the Robustness of Marginal Abatement Cost Curves: The Influence of World Energy Prices
Gernot Klepper and Sonja Peterson
Abstract: Since the study of Ellerman and Decaux (1998) marginal
abatement cost curves (MACCs) have become one of the favorite instruments
to analyze the impacts of the implementation of the Kyoto Protocol and
emission trading. This paper shows that the MACC in one country depends -
via the link of world energy prices - on the level of abatement in the rest
of the world. The strength of the dependence is influenced by factors, such
as trade elasticities and trade structures. After discussing the mechanism
theoretically, the CGE model DART is used to quantify the eŽects. We show
that the MACC of a region does indeed shift with changes in the abatement
level in the rest of the world and that especially with low domestic
abatement level the MACCs can diŽer considerably.
Keywords: Marginal abatement costs, energy prices, computable general equilibrium model, DART; (follow links to similar papers)
JEL-Codes: C68; D58; F18; Q41; (follow links to similar papers)
27 pages, January 2003
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