Moral Concerns on Tradable Pollution Permits in International Environmental Agreements

University of Oslo Department of Economics Memorandum Paper No. 13/2009

31 Pages Posted: 12 Aug 2009

See all articles by Johan Eyckmans

Johan Eyckmans

Catholic University of Leuven (KUL) - Center for Economic Studies

Snorre Kverndokk

Ragnar Frisch Centre for Economic Research

Multiple version iconThere are 2 versions of this paper

Date Written: August 12, 2009

Abstract

We investigate how moral concerns about permit trading affect an endogenous pollution permit trading equilibrium, where governments choose non-cooperatively the amount of permits they allocate to domestic industries. Politicians may feel reluctant to allow permit trading and/or may prefer that abatement is undertaken domestically due to moral concerns. This will have an effect on the initial permit allocations, and, therefore, on global emissions. The impact on global emissions depends on the precise formulation of the moral concerns, but under reasonable assumptions, we show that global emissions may increase. Thus, doing what is perceived as good does not always yield the desired outcome. However, this can be offset by restrictions on permit trading when governments have moral concerns about this trade.

Keywords: Tradable emission permits, international environmental agreements, non-cooperative game theory, moral motivation, identity.

JEL Classification: D63, Q54

Suggested Citation

Eyckmans, Johan and Kverndokk, Snorre, Moral Concerns on Tradable Pollution Permits in International Environmental Agreements (August 12, 2009). University of Oslo Department of Economics Memorandum Paper No. 13/2009. Available at SSRN: https://ssrn.com/abstract=1447954 or http://dx.doi.org/10.2139/ssrn.1447954

Johan Eyckmans

Catholic University of Leuven (KUL) - Center for Economic Studies ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Snorre Kverndokk (Contact Author)

Ragnar Frisch Centre for Economic Research ( email )

Gaustadalleen 21
N-0349 Oslo
Norway
+47 22958811 (Phone)
+47 22958825 (Fax)

HOME PAGE: http://www.frisch.uio.no/cv/snorrek_eng.html

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