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International Emission Permit Markets with Refunding

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  • Gersbach, Hans
  • Winkler, Ralph

Abstract

We propose a blueprint for an international emission permit market such as the EU trading scheme. Each country decides on the amount of permits it wants to offer. A fraction of these permits is grandfathered, the remainder is auctioned. Revenues from the auction are collected in a global fund and reimbursed to member countries in fixed proportions. We show that international permit markets with refunding lead to outcomes in which all countries tighten the issuance of permits and are better off compared to standard international permit markets. If the share of grandfathered permits is sufficiently small, we obtain approximately socially optimal emission reductions.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7035.

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Date of creation: Nov 2008
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Handle: RePEc:cpr:ceprdp:7035

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Keywords: climate change mitigation; global refunding scheme; international agreements; international permit markets; tradeable permits;

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Citations

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Cited by:
  1. Olivier Bos & Béatrice Roussillon & Paul Schweinzer, 2013. "Agreeing on Efficient Emissions Reduction," CESifo Working Paper Series 4345, CESifo Group Munich.
  2. Buchholz, Wolfgang & Cornes, Richard & Rübbelke, Dirk, 2011. "Interior matching equilibria in a public good economy: An aggregative game approach," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 639-645, August.
  3. Gersbach, Hans & Winkler, Ralph, 2011. "International emission permit markets with refunding," European Economic Review, Elsevier, vol. 55(6), pages 759-773, August.
  4. Fabio Sferra & Massimo Tavoni, 2013. "Endogenous Participation in a Partial Climate Agreement with Open Entry: A Numerical Assessment," Working Papers 2013.60, Fondazione Eni Enrico Mattei.
  5. Fuhai Hong & Susheng Wang, 2012. "Climate Policy, Learning, and Technology Adoption in Small Countries," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 51(3), pages 391-411, March.
  6. repec:old:wpaper:341 is not listed on IDEAS
  7. Carsten Helm & Stefan Pichler, 2011. "Climate Policy with Technology Transfers and Permit Trading," Working Papers V-341-11, University of Oldenburg, Department of Economics, revised Nov 2011.
  8. Balistreri, Edward J. & Hillberry, Russell H. & Rutherford, Thomas F., 2010. "Trade and welfare: Does industrial organization matter?," Economics Letters, Elsevier, vol. 109(2), pages 85-87, November.
  9. Hans Gersbach & Quirin Oberpriller, 2012. "Rules vs. Targets: Climate Treaties under Uncertainty," CER-ETH Economics working paper series 12/159, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
  10. Gersbach, Hans & Winkler, Ralph, 2012. "Global refunding and climate change," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 36(11), pages 1775-1795.
  11. Susumu Cato, 2010. "Emission Taxes and Optimal Refunding Schemes with Endogenous Market Structure," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 46(3), pages 275-280, July.

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