Chapter 77 Pre-testing International Climate Change Policies: Methods and Results

A subset of the world's countries may wish to commit themselves to stringent emission targets in an attempt to influence other countries to follow suit, thereby bringing about a significant reduction in the threat to the global climate. Moreover, if the pioneering countries were to connect a tradable quota system to these commitments, they would be in a position to provide information not only about the practicability and efficiency properties of this policy instrument but also about the general economic implications of the commitments made. If the set of countries were small, which seems quite likely in the case of pioneering agreements, this action could reveal, in particular, how efficient a small market for quota trade would be. Furthermore, it could also show, for a set of similarly developed countries as the only participants, whether the common presumption that their costs would be too similar for any significant amount of trade gains to arise were in fact correct.