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Substitutability and the cost of climate mitigation policy

Lu, Yingying; Stern, David Ian


We explore how and by how much assumptions about elasticities of substitution affect estimates of the cost of GHG emissions reduction policies in computable general equilibrium (CGE) models using G-Cubed, an intertemporal CGE model, to carry out a sensitivity and factor decomposition analysis. The results suggest that the average abatement cost rises non-linearly as elasticities are reduced. Substitution elasticities between capital, labor, energy and materials in production have a larger...[Show more]

CollectionsANU Research Publications
Date published: 2014
Type: Journal article
Source: Energy Procedia 61 (2014): 1622 - 1625
DOI: 10.1016/j.egypro.2014.12.309


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