Heterogeneous Agents and Multiple Equilibria:
Implications for Climate Policy Analysis
Stephen J. DeCanio
decanio@econ.ucsb.edu
General equilibrium models with heterogeneous agents
and complementary goods may exhibit multiple equilibria. These equilibria
can differ in all important respects, including allocations, prices, and
the distribution of income. The multiple equilibrium problem can arise
in single-period models but is particularly acute in multi-period models
of the type most relevant for the analysis of climate change. This
paper examines some of these cases, and shows that different equilibria can
correspond to different "points of view in time" that may favor different
generations.