This paper analyzes the consequences of unilateral climate policy in the presence of directed technical change. We develop a dynamic two-country model in which two otherwise identical countries differ in their environmental policy: one of the countries enforces a (binding) cap on emissions while the other does not. Focusing on carbon leakage, we show how allowing for directed technical change significantly modifies the results obtained otherwise
Type of Material
Conference Publication
Publisher
European Association of Environmental and Resource Economists
Copyright (Published Version)
2005, European Association of Environmental and Resource Economists
