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Is Emission Trading Beneficial?

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  • JOTA ISHIKAWA
  • KAZUHARU KIYONO
  • MORIHIRO YOMOGIDA

Abstract

We develop a two-country (North and South), two-good, general equilibrium model of international trade in goods and explore the effects of domestic and international emission trading under free trade in goods. Whereas domestic emission trading in North may result in carbon leakage by expanding South's production of the emission-intensive good, international emission trading may induce North to expand the production of the emission-intensive good by importing emission permits. Emission trading may deteriorate global environment. North's (South's) emission trading may not benefit South (North). International emission trading improves global efficiency but may not benefit both countries.
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Suggested Citation

  • Jota Ishikawa & Kazuharu Kiyono & Morihiro Yomogida, 2012. "Is Emission Trading Beneficial?," The Japanese Economic Review, Japanese Economic Association, vol. 63(2), pages 185-203, June.
    • Handle: RePEc:bla:jecrev:v:63:y:2012:i:2:p:185-203
    DOI: j.1468-5876.2012.00570.x
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    References listed on IDEAS

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    1. Markusen, James R. & Morey, Edward R. & Olewiler, Nancy, 1995. "Competition in regional environmental policies when plant locations are endogenous," Journal of Public Economics, Elsevier, vol. 56(1), pages 55-77, January.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Should there be international trade in pollution rights?
      by Economic Logician in Economic Logic on 2011-05-02 19:50:00

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    Cited by:

    1. HIGASHIDA Keisaku & ISHIKAWA Jota & TARUI Nori, 2021. "Carrying Carbon? Negative and Positive Carbon Leakage with International Transport," Discussion papers 21102, Research Institute of Economy, Trade and Industry (RIETI).
    2. Haitao CHENG & ISHIKAWA Jota, 2021. "Carbon Tax and Border Tax Adjustments with Technology and Location Choices," Discussion papers 21030, Research Institute of Economy, Trade and Industry (RIETI).
    3. Jota Ishikawa & Toshihiro Okubo, 2017. "Greenhouse-Gas Emission Controls and Firm Locations in North–South Trade," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 67(4), pages 637-660, August.
    4. Xiao Chen & Alan Woodland, 2013. "International trade and climate change," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(3), pages 381-413, June.
    5. Shiro Takeda & Toshi H. Arimura & Makoto Sugino, 2019. "Labor Market Distortions and Welfare-Decreasing International Emissions Trading," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(1), pages 271-293, September.
    6. Kazuharu Kiyono & Jota Ishikawa, 2013. "Environmental Management Policy Under International Carbon Leakage," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 54(3), pages 1057-1083, August.
    7. ISHIKAWA Jota & KIYONO Kazuharu & YOMOGIDA Morihiro, 2020. "Emissions Trading and International Trade," Discussion papers 20080, Research Institute of Economy, Trade and Industry (RIETI).
    8. Yoshiaki Nakada, 2017. "The effects of energy and commodity prices on commodity output in a three-factor, two-good general equilibrium trade model," Papers 1711.10096, arXiv.org, revised Nov 2018.

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    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment

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