Does the distribution of emission permits matter for international competitiveness?
AbstractThis paper analyzes the implications of the distribution of emission permits related to a strategic environmental policy and shows how it alters the competitive relation among firms in the international product market. Our model introduces permits trading into the Brander-Spencer  framework. It analyzes a class of two stages Cournot game involving two governments (Home and Foreign) and their respective industry. It shows the incentive for the Home government to distort is initial distribution of permits from the first-best rule to achieve trade-related policy objectives, enabling its domestic producers to improve their market shares. We establish that the Home government implements a higher distribution of permits than the optimal level.
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Bibliographic InfoPaper provided by Université Panthéon-Sorbonne (Paris 1) in its series Cahiers de la Maison des Sciences Economiques with number v05011.
Length: 19 pages
Date of creation: Jan 2005
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Tradable emission permits; international oligopoly; strategic policy.;
Find related papers by JEL classification:
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- F18 - International Economics - - Trade - - - Trade and Environment
- Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
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