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The burden sharing of pollution abatement costs in multi-regional open economies

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  • BOUCEKKINE, Raouf
  • GERMAIN, Marc

Abstract

The burden sharing of pollution abatement costs raises the issue of how the costs are supported by entities (regions or industries) of a country that decides to reduce pollution, e.g., in the Kyoto Protocol context. This paper explores this issue in the framework of a dynamic endogenous growth 2 sectors - 2 regions - 2 inputs Heckscher-Ohlin model of a small open economy with an international tradable permits market. Given an "emission-based grand-fathering" sharing rule, capital accumulation is more negatively affected by the environmental policy in the energy intensive sector if energy and capital are complementary. But the picture could be different in terms of total sectoral revenue, depending on the evolution of prices. Finally, we show that the impact of environmental policy at the regional level depends crucially on the evolution of regional specialization patterns.

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File URL: http://dx.doi.org/10.2202/1935-1690.1692
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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers RP with number -2114.

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Handle: RePEc:cor:louvrp:-2114

Note: In : The B.E. Journal of Macroeconomics, 9(1), 1-32, 2009.
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Cited by:
  1. Anping Chen & Nicolaas Groenewold, 2013. "Regional Effects in China of an Emissions-Reduction Policy: Tax v. Subsidy," ERSA conference papers ersa13p1275, European Regional Science Association.
  2. BOUCEKKINE, RAOUF & Krawczyk, Jacek B. & VALLÉE, Thomas, 2008. "Towards an understanding of tradeoffs between regional wealth, tightness of a common environmental constraint and the sharing rules," CORE Discussion Papers 2008055, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

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