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Consider the global warming environment discussed in class, where each firm gains utility as a function of their consumption, faces costs according to the current
Consider the global warming environment discussed in class, where each firm gains utility as a function of their consumption, faces costs according to the current stock of greenhouse gases, and greenhouse gases are persistent across periods according to a transition equation. In particular, suppose that the utility function is linear uit(cit) = cit, and the costs of global warming are quadratic in the current stock of greenhouse gases c(g) = g2. The transition equation is gt = gt1 c1t c2t
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