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Is Emission Trading Beneficial?

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  • ISHIKAWA Jota
  • KIYONO Kazuharu
  • YOMOGIDA Morihiro

Abstract

We develop a two-country (North and South), two-good, general equilibrium model of international trade in goods and explore the effects of domestic and international emission trading under free trade in goods. Whereas domestic emission trading in North may result in carbon leakage by expanding South's production of the emission-intensive good, international emission trading may induce North to expand the production of the emission-intensive good by importing emission permits. Emission trading may deteriorate global environment. North's (South's) emission trading may not benefit South (North). International emission trading improves global efficiency but may not benefit both countries.

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Paper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 11006.

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Length: 30 pages
Date of creation: Feb 2011
Date of revision:
Handle: RePEc:eti:dpaper:11006

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  1. Markusen, James R. & Morey, Edward R. & Olewiler, Nancy, 1995. "Competition in regional environmental policies when plant locations are endogenous," Journal of Public Economics, Elsevier, vol. 56(1), pages 55-77, January.
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  1. Should there be international trade in pollution rights?
    by Economic Logician in Economic Logic on 2011-05-02 14:50:00
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Cited by:
  1. Kazuharu Kiyono & Jota Ishikawa, 2013. "Environmental Management Policy Under International Carbon Leakage," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 54, pages 1057-1083, 08.

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