Climate Change is one of the major challenges for the 21st century. To fight deforestation it...

 

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Climate Change is one of the major challenges for the 21st century. To fight deforestation it is necessary worldwide effort. For simplicity assume that there are only two countries in the world, countries A and B. The two countries have identical preferences: U(C₁,D)=2 log C₁ + log D, where log denotes the natural logarithm, C; is each country private consumption, and D is the sum of global contributions to climate change agenda. Countries A and B contribute Da and D, hence D = D₂ + Db. Assume that pc = PD = 1 and that each country has a $1600 budget for both goods. Determine the private equilibrium level of contribution for country A. Climate Change is one of the major challenges for the 21st century. To fight deforestation it is necessary worldwide effort. For simplicity assume that there are only two countries in the world, countries A and B. The two countries have identical preferences: U(C₁,D)=2 log C₁ + log D, where log denotes the natural logarithm, C; is each country private consumption, and D is the sum of global contributions to climate change agenda. Countries A and B contribute Da and D, hence D = D₂ + Db. Assume that pc = PD = 1 and that each country has a $1600 budget for both goods. Determine the private equilibrium level of contribution for country A.