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An extensive literature analyses the costs and sometimes the benefits of introducing policies to control GHG emissions in a single country (Hoel, 1991; Bucholz and Konrad, 1994; Porter and Van Linde, 1995; Hoel and Schneider, 1997; Endres and Finus, 1998). Given the arguments proposed in the Introduction and the results summarized in Section 10.3.1, this type of exercise may seem unreasonable. There are, however, two main justifications for undertaking it. The first is that domestic abatement costs (related to domestic policies and measures) hardly depend on the coalition structure. Indeed, only if leakage is large, and if climate policies have a large impact on trade and financial flows, are the costs of domestic abatement policies significantly affected by the size of the coalitions and by the agreed emission targets. Hence, it may be useful to compute the costs of unilateral participation as a benchmark case, which identifies costs that can be reduced only when coalition forms and the Kyoto mechanisms are implemented among signatory countries. Notice the importance of a careful assessment of leakage and of trade and financial repercussions of climate policies (McKibbin et al., 1998). Notice also that the above arguments concern the costs but not the benefits of climate policies. Indeed, the climate benefits of unilateral participation are likely to be zero or almost zero for all or almost all countries (a possible exception is the USA), given the global nature of the climate problem (Hoel, 1991; Bucholz and Konrad, 1994; Endres and Finus, 1998).
A second reason to assess the cost of a unilateral participation is that it could identify a series of low cost (or no cost) options (so called low hanging fruits or no regrets actions) that could be implemented independently of the formation of a climate coalition. It could also help identify policy mixes that help restructure the fiscal system and public regulatory and incentive schemes in such a way that emission abatement costs are more than compensated by other economic (non-environmental) benefits (the so-called double dividends)11.
There are also cases in which unilateral actions have been analyzed from a very specific viewpoint. Examples are:
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