Journal Article

Marginal abatement cost curves in general equilibrium: The influence of world energy prices


  • Klepper
  • G.
  • Peterson
  • S.
Publication Date

Marginal abatement cost curves (MACCs) are a favorite instrument to analyze international emissions trading. This paper focuses on the question of how to defineMACCs in a general equilibrium context where the global abatement level influences energy prices and in turn national MACCs. We discuss the mechanisms theoretically and then use the CGE model DART for quantitative simulations. The result is, that changes in energy prices resulting from different global abatement levels do indeed affect national MACCs. Also, we compare different possibilities of defining MACCs—of which some are robust against changes in energy prices while others vary considerably.

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JEL Classification
C68, D58, F18, Q41

Key Words

  • climate change
  • Computable General Equilibrium
  • Energy prices
  • Klimawandel
  • Marginal abatement cost curves
  • model