Marginal Abatement Cost Curves in General Equilibrium: The Influence of World Energy Prices

42 Pages Posted: 13 Nov 2004

See all articles by Gernot Klepper

Gernot Klepper

Kiel Institute of World Economics

Sonja M. Peterson

Kiel Institute for the World Economy

Date Written: November 2004

Abstract

Marginal abatement cost curves (MACCs) are one of the favorite instruments to analyze the impacts of the implementation of the Kyoto Protocol and emissions trading. As shown in this paper one important factor that influences MACCs are energy prices. This leads to the question of how to define MACCs in a general equilibrium context where the overall abatement level world wide influences energy prices and thus national MACCs. We first discuss the mechanisms theoretically and then use the CGE model DART to quantify the effects. The result is, that changes in energy prices resulting from different world wide abatement levels do indeed affect the national MACCs. Also, we compare different possibilities of defining MACCs - of which some turn out to be robust against changes in energy prices while others vary considerably.

Keywords: Climate change, Marginal abatement cost, Energy price, Computable general equilibrium model

JEL Classification: C68, D58, F18, Q41

Suggested Citation

Klepper, Gernot and Peterson, Sonja M., Marginal Abatement Cost Curves in General Equilibrium: The Influence of World Energy Prices (November 2004). Available at SSRN: https://ssrn.com/abstract=615665 or http://dx.doi.org/10.2139/ssrn.615665

Gernot Klepper (Contact Author)

Kiel Institute of World Economics ( email )

D-24100 Kiel
Germany

Sonja M. Peterson

Kiel Institute for the World Economy ( email )

Duesternbrooker Weg 120
D-24118 Kiel
Germany
0431/8814-406 (Phone)

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