IDEAS home Printed from https://ideas.repec.org/a/kap/enreec/v38y2007i4p545-572.html
   My bibliography  Save this article

Hot air for sale: a quantitative assessment of Russia’s near-term climate policy options

Author

Listed:
  • Christoph Böhringer
  • Ulf Moslener
  • Bodo Sturm

Abstract

Since January 1st the European Union has launched an EU-internal emissions trading scheme (EU ETS) for emission-intensive installations as the central pillar to comply with the Kyoto Protocol. The EU ETS may be linked at some time to a Kyoto emissions market where greenhouse gas emission allowances of signatory Kyoto countries can be traded. In this paper we investigate the implications of Russian market power for environmental effectiveness and regional compliance costs to the Kyoto Protocol taking into account potential linkages between the Kyoto emissions market and the EU ETS. We find that Russia may have incentives to join the EU ETS as long as the latter remains separated from the Kyoto international emissions market. In this case, Russia can exert monopolistic price discrimination between two separated markets thereby maximizing revenues from hot air sales. The EU will be able to substantially reduce compliance costs when it does not restrain itself to EU-internal emission regulation schemes. However, part of the gains from extra-EU emissions trading will come at the expense of environmental effectiveness as (more) hot air will be drawn in.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Christoph Böhringer & Ulf Moslener & Bodo Sturm, 2007. "Hot air for sale: a quantitative assessment of Russia’s near-term climate policy options," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 38(4), pages 545-572, December.
    • Handle: RePEc:kap:enreec:v:38:y:2007:i:4:p:545-572
    DOI: 10.1007/s10640-007-9089-4
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s10640-007-9089-4
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10640-007-9089-4?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Varian, Hal R., 1989. "Price discrimination," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 10, pages 597-654, Elsevier.
    2. Michaelowa, Axel & Koch, Tobias, 1999. "Critical issues in current climate policy: Hot air, multi-level emission trading registries and changes in emission commitments due to international conflicts," HWWA Reports 194, Hamburg Institute of International Economics (HWWA).
    3. Löschel, Andreas & Lange, Andreas & Hoffmann, Tim & Böhringer, Christoph & Moslener, Ulf, 2004. "Assessing Emission Allocation in Europe: An Interactive Simulation Approach," ZEW Discussion Papers 04-40, ZEW - Leibniz Centre for European Economic Research.
    4. Gernot Klepper & Sonja Peterson, 2005. "Trading Hot-Air. The Influence of Permit Allocation Rules, Market Power and the US Withdrawal from the Kyoto Protocol," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 32(2), pages 205-228, October.
    5. Klepper, Gernot & Peterson, Sonja, 2004. "The EU emissions trading scheme allowance prices, trade flows and competitiveness effects," Open Access Publications from Kiel Institute for the World Economy 3270, Kiel Institute for the World Economy (IfW Kiel).
    6. R. Schmalensee & R. Willig (ed.), 1989. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 1, number 1.
    7. Michaelowa, Axel & Koch, Tobias, 1999. "Critical Issues in Current Climate Policy: "Hot air", multi-level emission trading registries and changes in emission commitments due to international conflicts," Report Series 26061, Hamburg Institute of International Economics.
    8. Christoph Bohringer, 2002. "Climate Politics from Kyoto to Bonn: From Little to Nothing?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 51-71.
    9. Gernot Klepper & Sonja Peterson, 2004. "The EU Emissions Trading Scheme. Allowance Prices, Trade Flows, Competitiveness Effects," Working Papers 2004.49, Fondazione Eni Enrico Mattei.
    10. Cathrine Hagem & Steffen Kallbekken & Ottar Mæstad & Hege Westskog, 2006. "Market Power with Interdependent Demand: Sale of Emission Permits and Natural Gas from Russia," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 34(2), pages 211-227, June.
    11. Christoph Bohringer & Tim Hoffmann & Andreas Lange & Andreas Loschel & Ulf Moslener, 2005. "Assessing Emission Regulation in Europe: An Interactive Simulation Approach," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 1-22.
    12. Bernard, Alain & Paltsev, Sergey & Reilly, John L. & Vielle, Marc & Viguier, Laurent, 2003. "Russia's Role in the Kyoto Protocol," IDEI Working Papers 237, Institut d'Économie Industrielle (IDEI), Toulouse.
    13. Warwick J. McKibbin & Peter J. Wilcoxen, 2002. "The Role of Economics in Climate Change Policy," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 107-129, Spring.
    14. R. Schmalensee & R. Willig (ed.), 1989. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 2, number 2.
    15. Bohringer, Christoph, 2000. "Cooling down hot air: a global CGE analysis of post-Kyoto carbon abatement strategies," Energy Policy, Elsevier, vol. 28(11), pages 779-789, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Tsung-Chen Lee & Hsiao-Chi Chen & Shi-Miin Liu, 2013. "Optimal strategic regulations in international emissions trading under imperfect competition," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 15(1), pages 39-57, January.
    2. Anger, Niels, 2006. "Emission trading beyond Europe: linking schemes in a post-Kyoto world," ZEW Discussion Papers 06-058, ZEW - Leibniz Centre for European Economic Research.
    3. Frank Jotzo & Regina Betz, 2009. "Linking the Australian Emissions Trading Scheme," Environmental Economics Research Hub Research Reports 0914, Environmental Economics Research Hub, Crawford School of Public Policy, The Australian National University.
    4. Larson, Donald F. & Ambrosi, Philippe & Dinar, Ariel & Rahman, Shaikh Mahfuzur & Entler, Rebecca, 2008. "Carbon markets, institutions, policies, and research," Policy Research Working Paper Series 4761, The World Bank.
    5. N. Anger & B. Brouns & J. Onigkeit, 2009. "Linking the EU emissions trading scheme: economic implications of allowance allocation and global carbon constraints," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 14(5), pages 379-398, June.
    6. Böhringer, Christoph & Rosendahl, Knut Einar, 2009. "Strategic partitioning of emission allowances under the EU Emission Trading Scheme," Resource and Energy Economics, Elsevier, vol. 31(3), pages 182-197, August.
    7. Godal Odd & Meland Frode, 2010. "Permit Markets, Seller Cartels and the Impact of Strategic Buyers," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-33, April.
    8. Tsung-Chen Lee, 2011. "Endogenous market structures in non-cooperative international emissions trading," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 16(6), pages 663-675, August.
    9. Elias Asproudis & Maria José Gil-Moltó, 2009. "Technological choice under environmentalists’ participation in Emissions Trading Systems," Discussion Papers in Economics 09/9, Division of Economics, School of Business, University of Leicester.
    10. Julien Chevallier, 2009. "Intertemporal Emissions Trading and Allocation Rules: Gainers, Losers and the Spectre of Market Power," Working Papers halshs-00124713, HAL.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. N. Anger & B. Brouns & J. Onigkeit, 2009. "Linking the EU emissions trading scheme: economic implications of allowance allocation and global carbon constraints," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 14(5), pages 379-398, June.
    2. Thomas Eichner & Rüdiger Pethig, 2007. "Efficient CO2 Emissions Control with National Emissions Taxes and International Emissions Trading," CESifo Working Paper Series 1967, CESifo.
    3. Kaplow, Louis & Shapiro, Carl, 2007. "Antitrust," Handbook of Law and Economics, in: A. Mitchell Polinsky & Steven Shavell (ed.), Handbook of Law and Economics, edition 1, volume 2, chapter 15, pages 1073-1225, Elsevier.
    4. Simon P. Anderson & Régis Renault, 2011. "Price Discrimination," Chapters, in: André de Palma & Robin Lindsey & Emile Quinet & Roger Vickerman (ed.), A Handbook of Transport Economics, chapter 22, Edward Elgar Publishing.
    5. Qu, Zhan & Raff, Horst & Schmitt, Nicolas, 2018. "Incentives through inventory control in supply chains," International Journal of Industrial Organization, Elsevier, vol. 59(C), pages 486-513.
    6. Anger, Niels & Oberndorfer, Ulrich, 2008. "Firm performance and employment in the EU emissions trading scheme: An empirical assessment for Germany," Energy Policy, Elsevier, vol. 36(1), pages 12-22, January.
    7. Morten Hviid & Greg Shaffer, 2012. "Optimal low-price guarantees with anchoring," Quantitative Marketing and Economics (QME), Springer, vol. 10(4), pages 393-417, December.
    8. Yin, Xiangkang, 2004. "Two-part tariff competition in duopoly," International Journal of Industrial Organization, Elsevier, vol. 22(6), pages 799-820, June.
    9. Imke Reimers & Claire (Chunying) Xie, 2019. "Do Coupons Expand or Cannibalize Revenue? Evidence from an e-Market," Management Science, INFORMS, vol. 65(1), pages 286-300, January.
    10. Andreas M. Fischer & Matthias Lutz & Manueal Wälti, 2007. "Who Prices Locally? Survey Evidence of Swiss Exporters," University of St. Gallen Department of Economics working paper series 2007 2007-39, Department of Economics, University of St. Gallen.
    11. Besancenot, Damien & Vranceanu, Radu, 2004. "Quality and price dispersion in an equilibrium search model," Journal of Economics and Business, Elsevier, vol. 56(2), pages 99-116.
    12. Einer Elhauge & Barry Nalebuff, 2017. "The Welfare Effects of Metering Ties," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 33(1), pages 68-104.
    13. Tomohisa Okada & Takanori Adachi, 2013. "Third-Degree Price Discrimination, Consumption Externalities, and Market Opening," Journal of Industry, Competition and Trade, Springer, vol. 13(2), pages 209-219, June.
    14. Benjamin A. Olken & Patrick Barron, 2009. "The Simple Economics of Extortion: Evidence from Trucking in Aceh," Journal of Political Economy, University of Chicago Press, vol. 117(3), pages 417-452, June.
    15. Gersbach, Hans & Winkler, Ralph, 2011. "International emission permit markets with refunding," European Economic Review, Elsevier, vol. 55(6), pages 759-773, August.
    16. Inderst Roman & Valletti Tommaso, 2009. "Third-Degree Price Discrimination with Buyer Power," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(1), pages 1-16, February.
    17. Anam, Mahmudul & Chiang, Shin-Hwan, 2006. "Price discrimination and social welfare with correlated demand," Journal of Economic Behavior & Organization, Elsevier, vol. 61(1), pages 110-122, September.
    18. Layson, Stephen, 2010. "Quasi‐linear Utility and Two‐Market Monopoly," UNCG Economics Working Papers 10-6, University of North Carolina at Greensboro, Department of Economics.
    19. Noto, Claudio, 2020. "Airport slots, secondary trading, and congestion pricing at an airport with a dominant network airline," Research in Transportation Economics, Elsevier, vol. 79(C).
    20. Kobbi Nissim & Rann Smorodinsky & Moshe Tennenholtz, 2018. "Segmentation, Incentives, and Privacy," Mathematics of Operations Research, INFORMS, vol. 43(4), pages 1252-1268, November.

    More about this item

    Keywords

    Market power; Hot air; Climate policy; D42; Q25;
    All these keywords.

    JEL classification:

    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:enreec:v:38:y:2007:i:4:p:545-572. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.