Friday, October 3, 2008

China and a High Marginal Cost Curve?

According to this article at Bloomberg, China is calling for other, developed nations to pollute less so that it can pollute more. This would make sense if China's marginal cost curve was higher than other, developed nations. However, with the US saying that we're willing to talk to the UN about cutting our emissions as long as China and India are included, it makes negotiations seem unlikely. Possible solutions?...Do a study to see *how much higher* China's MC curve is than the US MC curve (as an aggregate). Although it will probably be higher, the large growth rate of China's GDP would have to be taken into account. I'm just hoping that we don't see a similar request from India with their $3000 car coming soon (read: 3000 pound polluting gorilla...).

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