Trading Hot-Air. The Influence of Permit Allocation Rules, Market Power and the US Withdrawal from the Kyoto Protocol
AbstractAfter the conferences in Bonn and Marrakech, it is likely that international emissions trading will be realized in the near future. Major influences on the permit market␣are the institutional detail, the participation structure and the treatment of hot-air. Different scenarios not only differ in their implications for the demand and supply of permits and thus the permit price, but also in their allocative effects. In this paper we discuss likely the institutional designs for permit allocation in the hot-air economies and the use of market power and quantify the resulting effects by using the computable general equilibrium model DART. It turns out that the amount of hot-air supplied will be small if hot-air economies cooperate in their decisions. Under welfare maximization, more hot-airis supplied than in the case where governments try to maximize revenues from permit sales. Copyright Springer 2005
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Bibliographic InfoArticle provided by European Association of Environmental and Resource Economists in its journal Environmental & Resource Economics.
Volume (Year): 32 (2005)
Issue (Month): 2 (October)
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Web page: http://www.springerlink.com/link.asp?id=100263
CGE model; DART; emission trading; hot-air; Kyoto Protocol; market power; permit allocation; C68; D58; F18; Q48;
Other versions of this item:
- Klepper, Gernot & Peterson, Sonja, 2005. "Trading hot-air : the influence of permit allocation rules, market power and the US withdrawal from the Kyoto Protocol," Open Access Publications from Kiel Institute for the World Economy 3718, Kiel Institute for the World Economy (IfW).
- Gernot Klepper & Sonja Peterson, 2002. "Trading Hot Air The Influence of Permit Allocation Rules, Market Power and the US Withdrawal from the Kyoto Protocol," Kiel Working Papers 1133, Kiel Institute for the World Economy.
- C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
- D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
- F18 - International Economics - - Trade - - - Trade and Environment
- Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
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