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Emission trading and international competition: The impact of labor market rigidity on technology adoption and output

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  • Caparrós, Alejandro
  • Péreau, Jean-Christophe
  • Tazdaït, Tarik

Abstract

Emission trading systems have been proposed in different regions to reduce polluting emissions and are in use in the European Union for carbon dioxide emissions. One of the objectives of these systems is to encourage firms to adopt advanced abatement technologies. However, permits also create an incentive to reduce output, which may be seen as negative by policy makers. We analyze the impact of a rigid labour market on these two outcomes, showing the conditions necessary to avoid reductions in production while keeping the incentives to improve abatement technologies. The analysis is done for oligopolistic firms engaged in international rivalry.

Suggested Citation

  • Caparrós, Alejandro & Péreau, Jean-Christophe & Tazdaït, Tarik, 2013. "Emission trading and international competition: The impact of labor market rigidity on technology adoption and output," Energy Policy, Elsevier, vol. 55(C), pages 36-43.
  • Handle: RePEc:eee:enepol:v:55:y:2013:i:c:p:36-43
    DOI: 10.1016/j.enpol.2012.09.017
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    Cited by:

    1. Chang, Kai & Zhang, Chao & Chang, Hao, 2016. "Emissions reduction allocation and economic welfare estimation through interregional emissions trading in China: Evidence from efficiency and equity," Energy, Elsevier, vol. 113(C), pages 1125-1135.

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    Keywords

    Emission trading; Labor market; Technology;

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