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Time Preference, Stock Externalities and Strategic Reactions

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  • Zili Yang

Abstract

This paper examines the relationship between the rateof time preference and strategic reactions in dealing with climate change caused by anthropogenic greenhouse gas (GHG) emissions. Treating climate change as stock externalities, the RICE model (Nordhaus and Yang [1996]) is employed in this paper for simulation studies. The simulation results show that when regions' rate of time preference in evaluating climatechange is sufficiently low, the paths of efficient GHGemission reduction measurement and the inefficient Nash equilibrium outcome are close. The paper also provides general interpretations of such phenomena. Finally, the implications of a low rate of time preference on GHG emission reduction policies are discussed. Copyright Kluwer Academic Publishers 2001

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  • Zili Yang, 2001. "Time Preference, Stock Externalities and Strategic Reactions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 18(2), pages 233-250, February.
    • Handle: RePEc:kap:enreec:v:18:y:2001:i:2:p:233-250
    DOI: 10.1023/A:1011160620922
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    1. William R. Cline, 1992. "Economics of Global Warming, The," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 39, January.
    2. Nordhaus, William D & Yang, Zili, 1996. "A Regional Dynamic General-Equilibrium Model of Alternative Climate-Change Strategies," American Economic Review, American Economic Association, vol. 86(4), pages 741-765, September.
    3. Stephen C Peck & Thomas J. Teisberg, 1992. "CETA: A Model for Carbon Emissions Trajectory Assessment," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 55-78.
    4. Alan Manne & Richard Richels, 1992. "Buying Greenhouse Insurance: The Economic Costs of CO2 Emission Limits," MIT Press Books, The MIT Press, edition 1, volume 1, number 026213280x, April.
    5. Brito, D L, 1972. "A Dynamic Model of an Armaments Race," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 13(2), pages 359-375, June.
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    Cited by:

    1. Yang, Zili, 2003. "Dual-rate discounting in dynamic economic-environmental modeling," Economic Modelling, Elsevier, vol. 20(5), pages 941-957, September.

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    Keywords

    stock externality; climate change;

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