Discussion Papers, Department of Business and Management Science, Norwegian School of Economics (NHH)
Gunnar S. Eskeland
Leadership in Climate Policy: Is there a case for Early Unilateral Unconditional Emission Reductions?
Abstract: One may misread economic theory on climate policy to
provide a warning against unilateral mitigation. While important lessons
are drawn from ‘global problems require global solutions’, these say little
about what to do in a phase before or without a global agreement - or with
weak ones. In the literature on cooperation and leadership in provision of
public goods, early provision may stimulate provision from others. A key to
leadership is signaling; an early mover has private information and is
motivated in part by knowing that others will follow. Others will follow if
they understand that the early mover demonstrates that emission reductions
are feasible and adoptable. Our analysis finds that early movers will be
cognizant of what they need to demonstrate, and they will be concerned
about and act on carbon leakage. Leadership can be deterred by concerns for
free riding, but this is more likely for a country or coalition that is
large in terms of emissions and face others who are both large and
vulnerable to climate change. We suggest leadership is possible early in
this century: numbers indicate that few – if any - need find themselves
deterred from early action of some sort.
Keywords: Climate policy; unilateral mitigation; (follow links to similar papers)
JEL-Codes: Q00; Q50; Q54; (follow links to similar papers)
35 pages, June 14, 2013
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