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Substitutability and the cost of climate mitigation policy

Lu, Yingying; Stern, David


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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