Fig. 8
Utility and social welfare. The utility level of the emerging country A increases by about nearly 40%, whereas the utility level of the developed country B declines slightly by about 13% over the 15 years analyzed so that the social welfare of the two-country economy increased by about 6.3% over the observed period. The decline of the CO2 emissions of country B is accompanied by a decline of the utility of the country. The elasticity of substitution expressed as the utility loss caused by the taxation of CO2 increased from 0.7047 in 2020 to 0.7096 in 2021 (Fig. 9)