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Greenhouse-gas Emission Controls and International Carbon Leakage through Trade Liberalization

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  • Ishikawa, Jota
  • Okubo, Toshihiro

Abstract

This paper studies greenhouse-gas (GHG) emission controls in the presence of carbon leakage through international firm relocation. The Kyoto Protocol requires developed countries to reduce GHG emissions by a certain amount. Comparing emission quotas with emission taxes, we show that taxes coupled with lower trade costs facilitate more firm relocations than quotas do, causing more international carbon leakage. Thus, if a country is concerned about global emissions, emission quotas would be adopted to mitigate the carbon leakage. Firm relocation entails a trade-off between trade liberalization and emission regulations. Emission regulations may be hampered by trade liberalization, and vice versa.

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File URL: http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/16318/5/070ccesDP_003.pdf
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Bibliographic Info

Paper provided by Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University in its series CCES Discussion Paper Series with number 3.

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Length: 33 p.
Date of creation: Nov 2008
Date of revision:
Handle: RePEc:hit:ccesdp:3

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Keywords: trade liberalization; global warming; Kyoto Protocol; emission tax; emission quota; carbon leakage;

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Cited by:
  1. Copeland, Brian R., 2012. "International trade and green growth," Policy Research Working Paper Series 6235, The World Bank.
  2. Jota Ishikawa & Toshihiro Okubo, 2010. "Environmental Standards under International Oligopoly," Global COE Hi-Stat Discussion Paper Series gd10-141, Institute of Economic Research, Hitotsubashi University.
  3. Thomas Eichner & Rüdiger Pethig, 2009. "Carbon Leakage, the Green Paradox and Perfect Future Markets," CESifo Working Paper Series 2542, CESifo Group Munich.
  4. Kazuharu Kiyono & Jota Ishikawa, 2011. "Environmental Management Policy under International Carbon Leakage," Global COE Hi-Stat Discussion Paper Series gd11-204, Institute of Economic Research, Hitotsubashi University.
  5. Forslid, Rikard & Okubo, Toshihiro & Sanctuary, Mark, 2013. "Trade, Transboundary Pollution and Market Size," CEPR Discussion Papers 9412, C.E.P.R. Discussion Papers.
  6. John Feddersen, 2012. "Why we can't confirm the pollution haven hypothesis: A model of carbon leakage with agglomeration," Economics Series Working Papers 613, University of Oxford, Department of Economics.

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