A Lindahl Solution to International Emissions Trading
AbstractWe consider international negotiations on the level of global pollution, and examine the Lindahl solution which determines the distribution of the pollution permits with unanimous agreement. We show various properties to clarify difficulties to achieve a Pareto efficient allocation as an agreement. The Lindahl solution may result in an unfair allocation, and it does not belong to the $\gamma$-core as in other solutions based on emissions trading. On the other hand, we provide mechanisms that implement the Lindahl solution as the subgame-perfect equilibrium. We also consider the market with region-specific prices as a device to induce second-best Pareto efficient allocations.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Queen's University, Department of Economics in its series Working Papers with number 1177.
Length: 45 pages
Date of creation: Aug 2008
Date of revision:
International emissions trading; Global externality; Lindahl equilibrium; Efficiency; Equity; Core; Implementability; Second-best analysis;
Find related papers by JEL classification:
- Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters
- D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
- H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
- Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-08-31 (All new papers)
- NEP-ENE-2008-08-31 (Energy Economics)
- NEP-ENV-2008-08-31 (Environmental Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Eyckmans, Johan, 1997. "Nash Implementation of a Proportional Solution to International Pollution Control Problems," Journal of Environmental Economics and Management, Elsevier, vol. 33(3), pages 314-330, July.
- Tadenuma, Koichi, 2005. "Possibility and Optimality of Agreements in International Negotiations on Climate Change," Discussion Papers 2004-13, Graduate School of Economics, Hitotsubashi University.
- Moore, John & Repullo, Rafael, 1988. "Subgame Perfect Implementation," Econometrica, Econometric Society, vol. 56(5), pages 1191-1220, September.
- Chander, P. & Tulkens, H., .
"The core of an economy with multilateral environmental externalities,"
CORE Discussion Papers RP
-1276, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Henry Tulkens & Parkash Chander, 1997. "The Core of an Economy with Multilateral Environmental Externalities," International Journal of Game Theory, Springer, vol. 26(3), pages 379-401.
- CHANDER, Parkash & TULKENS, Henry, 1995. "The Core of an Economy with Multilateral Environmental Externalities," CORE Discussion Papers 1995050, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Chander, Parkash & Tulkens, Henry, 1994. "The Core of an Economy With Multilateral Environmental Externalities," Working Papers 886, California Institute of Technology, Division of the Humanities and Social Sciences.
- John Duggan & Joanne Roberts, 2002.
"Implementing the Efficient Allocation of Pollution,"
American Economic Review,
American Economic Association, vol. 92(4), pages 1070-1078, September.
- Joanne Roberts, 1999. "Implementing the Efficient Allocation of Pollution," Working Papers jorob-99-01, University of Toronto, Department of Economics.
- Helm, Carsten, 2003. "International emissions trading with endogenous allowance choices," Journal of Public Economics, Elsevier, vol. 87(12), pages 2737-2747, December.
- Marc Fleurbaey & François Maniquet, 2006.
"Compensation and responsibility,"
- D. K. Foley, 1967.
"Lindahl's Solution and the Core of an Economy with Public Goods,"
3, Massachusetts Institute of Technology (MIT), Department of Economics.
- Foley, Duncan K, 1970. "Lindahl's Solution and the Core of an Economy with Public Goods," Econometrica, Econometric Society, vol. 38(1), pages 66-72, January.
- Danziger, Leif & Schnytzer, Adi, 1991. "Implementing the Lindahl voluntary-exchange mechanism," European Journal of Political Economy, Elsevier, vol. 7(1), pages 55-64, April.
- Shiell, Leslie, 2003. "Equity and efficiency in international markets for pollution permits," Journal of Environmental Economics and Management, Elsevier, vol. 46(1), pages 38-51, July.
- Tian Guoqiang, 1994. "Implementation of Linear Cost Share Equilibrium Allocations," Journal of Economic Theory, Elsevier, vol. 64(2), pages 568-584, December.
- Guttman, Joel M, 1978. "Understanding Collective Action: Matching Behavior," American Economic Review, American Economic Association, vol. 68(2), pages 251-55, May.
- Arthur Caplan & Emilson Silva, 2002.
"An Equitable, Efficient and Implementable Scheme to Control Global Carbon Dioxide Emissions,"
2002-22, Utah State University, Department of Economics.
- Arthur Caplan & Emilson Silva, 2007. "An equitable, efficient and implementable scheme to control global carbon dioxide emissions," International Tax and Public Finance, Springer, vol. 14(3), pages 263-279, June.
- Arthur J. Caplan & Richard C. Cornes & Emilson C. D. Silva, 2003. "An ideal Kyoto protocol: emissions trading, redistributive transfers and global participation," Oxford Economic Papers, Oxford University Press, vol. 55(2), pages 216-234, April.
- Roemer, J.E., 1988. "On Public Ownership," Papers 317, California Davis - Institute of Governmental Affairs.
- Boadway, Robin & Song, Zhen & Tremblay, Jean-François, 2010.
"The Efficiency of Voluntary Pollution Abatement when Countries can Commit,"
CCES Discussion Paper Series
28, Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University.
- Boadway, Robin & Song, Zhen & Tremblay, Jean-François, 2011. "The efficiency of voluntary pollution abatement when countries can commit," European Journal of Political Economy, Elsevier, vol. 27(2), pages 352-368, June.
- Robin Boadway & Zhen Song & Jean-Francois Tremblay, 2009. "The Efficiency of Voluntary Pollution Abatement when Countries can Commit," Working Papers 1205, Queen's University, Department of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Babcock).
If references are entirely missing, you can add them using this form.