We decompose the economic implications of the Kyoto Protocol at the cross-country level, splitting the total economic impact for each region into contributions from its own emission abatement policy and those from other regions. Our analysis which is based on a large-scale computable general equilibrium model for the world economy indicates that spillover effects are an important consequence of multilateral carbon abatement policies. We calculate a cross-country matrix for monetary transfer payments which would have to be assigned on a bilateral basis in order to provide compensation for the international spillovers associated with the implementation of the Kyoto Protocol.
Böhringer, Christoph and Thomas F. Rutherford (2000), Decomposing the Cost of Kyoto. A Global CGE Analysis of Multilateral Policy Impacts, ZEW Discussion Paper No. 00-11, Mannheim. Download