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Strategic Choice of Domestic Environmental Policy Instrument and International Emissions Trading Scheme in an Open Economy with Imperfect Competition

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Author Info
Boom, Jan Tjeerd
Abstract

This paper presents a model of imperfect international competition. Within this framework, the optimal choice of national environmental policy instrument and international emissions trading scheme is discussed. The choice of national instrument is restricted to absolute and relative standards, which form the basis for permit and credit trading respectively. It is shown that relatives standards and credit trading lead to higher output than emission ceilings and permit trading. I find that governments want to increase production beyond the level reached with emission ceilings and therefore prefer relative standards. Furthermore, international emissions trading is only optimal when the country imports emission quotas, and in several cases, governments will choose not to allow international emissions trading.

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Paper provided by Royal Veterinary and Agricultural University, Food and Resource Economic Institute in its series Unit of Economics Working papers with number 24177.

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Date of creation: 2003
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Handle: RePEc:ags:rvaewp:24177

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Related research
Keywords: environmental policy; emissions trading; credit trading; international trade; imperfect competition; strategic behavior; Environmental Economics and Policy; F12; L51; Q25; Q28;

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  1. Brander, James A. & Spencer, Barbara J., 1985. "Export subsidies and international market share rivalry," Journal of International Economics, Elsevier, vol. 18(1-2), pages 83-100, February. [Downloadable!] (restricted)
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  2. Boom, Jan-Tjeerd, 2001. "International emissions trading under the Kyoto Protocol: : credit trading," Energy Policy, Elsevier, vol. 29(8), pages 605-613, June. [Downloadable!] (restricted)
  3. Ulph, Alistair, 1996. "Environmental Policy and International Trade when Governments and Producers Act Strategically," Journal of Environmental Economics and Management, Elsevier, vol. 30(3), pages 265-281, May. [Downloadable!] (restricted)
  4. Udo Ebert, 1998. "Relative standards: A positive and normative analysis," Journal of Economics, Springer, vol. 67(1), pages 17-38, February. [Downloadable!] (restricted)
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This page was last updated on 2009-12-26.

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