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A simple model is used to illustrate the effects of a reduction in (marginal) abatement cost in a two country setting. It can be shown that a the country experiencing a cost reduction can actually be worse off. This holds true for a variety of quantity and price based emission policies. The most...
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. We propose a theory in which differences in preferences, productivity, and risk exposure generate gains from trade, but … production. Along with an increase in valuations, the model can generate a joint decline in investment, productivity, risk …
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