Partial International Emission Trading

Univ. of Nottingham Research Paper No. 2008/27

40 Pages Posted: 6 Apr 2009

See all articles by Bouwe Dijkstra

Bouwe Dijkstra

University of Nottingham - School of Economics

Edward Manderson

University of Nottingham - School of Economics

Tae-Yeoun Lee

Faculty of Economics, Ryukoku University

Date Written: November 1, 2008

Abstract

In a model inspired by the EU Emissions Trading Scheme, non-cooperative countries allocate their emissions to internationally trading and non-trading sectors. Each country is better off with trading than without, and aggregate welfare is maximized with all sectors in the trading scheme. We simulate the effects of expanding the trading scheme in a two-country model with quadratic abatement costs. If only the original trading sector is asymmetric between countries, the welfare change is always positive and the same in both countries. If only the additional trading sector is asymmetric, one country might lose, but there is an aggregate welfare gain. If only the non-trading sector is asymmetric, both countries always gain.

Keywords: International emission trading, EU Emission Trading Scheme

JEL Classification: H23, Q28, Q56

Suggested Citation

Dijkstra, Bouwe and Manderson, Edward and Lee, Tae-Yeoun, Partial International Emission Trading (November 1, 2008). Univ. of Nottingham Research Paper No. 2008/27. Available at SSRN: https://ssrn.com/abstract=1373767 or http://dx.doi.org/10.2139/ssrn.1373767

Bouwe Dijkstra (Contact Author)

University of Nottingham - School of Economics ( email )

University Park
Nottingham, NG7 2RD
United Kingdom
+44 115 8467205 (Phone)
+44 115 9514159 (Fax)

Edward Manderson

University of Nottingham - School of Economics ( email )

University Park
Nottingham, NG7 2RD
United Kingdom

Tae-Yeoun Lee

Faculty of Economics, Ryukoku University ( email )

67 Tsukamoto-cho,Fukakusa,
Fushimi-ku,
Kyoto, Kyoto 612 8577
Japan
+81-75-642-1111 (Phone)
-81-75-645-6444 (Fax)

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