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Moral concerns on tradable pollution permits in international environmental agreements

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  • Johan EYCKMANS
  • Snorre KVERNDOKK

Abstract

We investigate how moral concerns about permit trading affect an endogenous pollution permit trading equilibrium, where governments choose non-cooperatively the amount of permits they allocate to domestic industries. Politicians may feel reluctant to allow permit trading and/or may prefer that abatement is undertaken domestically due to moral concerns. This will have an effect on the initial permit allocations, and, therefore, on global emissions. The impact on global emissions depends on the precise formulation of the moral concerns, but under reasonable assumptions, we show that global emissions may increase. Thus, doing what is perceived as good does not always yield the desired outcome. However, this can be offset by restrictions on permit trading when governments have moral concerns about this trade.

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Bibliographic Info

Paper provided by Katholieke Universiteit Leuven, Centrum voor Economische Studiën in its series Center for Economic Studies - Discussion papers with number ces09.12.

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Date of creation: Jun 2009
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Handle: RePEc:ete:ceswps:ces09.12

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Keywords: Tradable emission permits; international environmental agreements; non-cooperative game theory; moral motivation; identity.;

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References

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Citations

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Cited by:
  1. Birgit Bednar-Friedl, 2012. "Climate policy targets in emerging and industrialized economies: the influence of technological differences, environmental preferences and propensity to save," Empirica, Springer, vol. 39(2), pages 191-215, May.
  2. Pittel, Karen & Rübbelke, Dirk T. G., 2013. "International Climate Finance and Its Influence on Fairness and Policy," Munich Reprints in Economics 19342, University of Munich, Department of Economics.
  3. Rübbelke, Dirk T.G., 2011. "International support of climate change policies in developing countries: Strategic, moral and fairness aspects," Ecological Economics, Elsevier, vol. 70(8), pages 1470-1480, June.
  4. Fuhai Hong & Susheng Wang, 2012. "Climate Policy, Learning, and Technology Adoption in Small Countries," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 51(3), pages 391-411, March.
  5. Anderson, Blake & M'Gonigle, Michael, 2012. "Does ecological economics have a future?," Ecological Economics, Elsevier, vol. 84(C), pages 37-48.
  6. Wu, Pei-Ing & Chen, Chai Tzu & Cheng, Pei-Ching & Liou, Je-Liang, 2014. "Climate game analyses for CO2 emission trading among various world organizations," Economic Modelling, Elsevier, vol. 36(C), pages 441-446.

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