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Efficiency Gains Under Exchange-Rate Emission Trading

Author

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  • Finn Førsund
  • Eric NÆvdal

Abstract

In the case of emission of non-uniformly dispersed pollutants such as SO2 the negative effects depend on the location of the sources. A unit increase at one source must be compensated by either a larger or smaller reduction at another source to keep the negative effects at the same level. Emission trading between countries is possible under the Second Sulphur Protocol. Exchange rate trading and third party problems are studied within a simultaneous model facilitating impositions of various environmental constraints. Simulations based on the negotiated emission quotas are offered. Results indicate potential cost savings of 19%. Copyright Kluwer Academic Publishers 1998

Suggested Citation

  • Finn Førsund & Eric NÆvdal, 1998. "Efficiency Gains Under Exchange-Rate Emission Trading," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 12(4), pages 403-423, December.
  • Handle: RePEc:kap:enreec:v:12:y:1998:i:4:p:403-423
    DOI: 10.1023/A:1008247511950
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    References listed on IDEAS

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    1. Krupnick, Alan J. & Oates, Wallace E. & Van De Verg, Eric, 1983. "On marketable air-pollution permits: The case for a system of pollution offsets," Journal of Environmental Economics and Management, Elsevier, vol. 10(3), pages 233-247, September.
    2. Montgomery, W. David, 1972. "Markets in licenses and efficient pollution control programs," Journal of Economic Theory, Elsevier, vol. 5(3), pages 395-418, December.
    3. W. Montgomery, 1974. "Artificial markets and the theory of games," Public Choice, Springer, vol. 18(1), pages 25-40, June.
    4. McGartland, Albert M. & Oates, Wallace E., 1985. "Marketable permits for the prevention of environmental deterioration," Journal of Environmental Economics and Management, Elsevier, vol. 12(3), pages 207-228, September.
    5. Ger Klaassen & Finn Førsund & Markus Amann, 1994. "Emission trading in Europe with an exchange rate," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 4(4), pages 305-330, August.
    6. Atkinson, Scott & Tietenberg, Tom, 1991. "Market failure in incentive-based regulation: The case of emissions trading," Journal of Environmental Economics and Management, Elsevier, vol. 21(1), pages 17-31, July.
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    Citations

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    Cited by:

    1. Eid, Tron & Hoen, Hans Fredrik & Okseter, Petter, 2001. "Economic consequences of sustainable forest management regimes at non-industrial forest owner level in Norway," Forest Policy and Economics, Elsevier, vol. 2(3-4), pages 213-228, July.
    2. Chao-Ning Liao, 2009. "Technology adoption decisions under a mixed regulatory system of tradable permits and air pollution fees for the control of Total Suspended Particulates in Taiwan," Journal of Regulatory Economics, Springer, vol. 35(2), pages 135-153, April.
    3. Krysiak, Frank C. & Schweitzer, Patrick, 2010. "The optimal size of a permit market," Journal of Environmental Economics and Management, Elsevier, vol. 60(2), pages 133-143, September.
    4. Gren, Ing-Marie & Carlsson, Mattias & Elofsson, Katarina & Munnich, Miriam, 2012. "Stochastic carbon sinks for combating carbon dioxide emissions in the EU," Energy Economics, Elsevier, vol. 34(5), pages 1523-1531.
    5. Hoen, Hans Fredrik & Eid, Tron & Okseter, Petter, 2006. "Efficiency gains of cooperation between properties under varying target levels of old forest area coverage," Forest Policy and Economics, Elsevier, vol. 8(2), pages 135-148, March.
    6. F.R. Forsund, 2000. "An Economic Interpretation of the Compensation Mechanism in the RAINS Model," Working Papers ir00036, International Institute for Applied Systems Analysis.
    7. Førsund, Finn R & Wolfgang, Ove, 2001. "The Compensation Mechanism in the RAINS Model: The Norwegian Targets for Acidification," Memorandum 34/2001, Oslo University, Department of Economics.
    8. Marianne Keudel, 2006. "Water Quality Trading: Theoretical and Practical Approaches," IWP Discussion Paper Series 01/2006, Institute for Economic Policy, Cologne, Germany.
    9. Finus, Michael & Tjotta, Sigve, 2003. "The Oslo Protocol on sulfur reduction: the great leap forward?," Journal of Public Economics, Elsevier, vol. 87(9-10), pages 2031-2048, September.
    10. Simon Quemin & Christian de Perthuis, 2017. "Transitional Restricted Linkage between Emissions Trading Schemes," Working Papers 2017.31, FAERE - French Association of Environmental and Resource Economists.
    11. Hung, Ming-Feng & Shaw, Daigee, 2005. "A trading-ratio system for trading water pollution discharge permits," Journal of Environmental Economics and Management, Elsevier, vol. 49(1), pages 83-102, January.

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