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International Trade in Oil, Gas and Carbon Emission Rights: An Intertemporal General Equilibrium Model

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  • Alan S. Manne
  • Thomas F. Rutherford

Abstract

This paper employs a five-region intertemporal model to examine three issues related to carbon emission restrictions. First, we investigate the possible impact of such limits upon future oil prices. We show that carbon limits are likely to differ in their near- and long-term impact. Second, we analyze the problem of “leakage†which could arise if the OECD countries were to adopt unilateral limits upon carbon emissions. Third, we quantify some of the gains from trade in carbon emission rights. Each of these issues have been studied before, but to our knowledge this is the first study based on a multi-regional, forward-looking model. We show that sequential joint maximization can be an effective way to compute equilibria for intertemporal general equilibrium models of international trade.

Suggested Citation

  • Alan S. Manne & Thomas F. Rutherford, 1994. "International Trade in Oil, Gas and Carbon Emission Rights: An Intertemporal General Equilibrium Model," The Energy Journal, , vol. 15(1), pages 57-76, January.
    • Handle: RePEc:sae:enejou:v:15:y:1994:i:1:p:57-76
    DOI: 10.5547/ISSN0195-6574-EJ-Vol15-No1-4
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    References listed on IDEAS

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    1. Victor Ginsburgh & Jean Waelbroeck, 1981. "Activity Analysis and General Equilibrium Modelling," ULB Institutional Repository 2013/1649, ULB -- Universite Libre de Bruxelles.
    2. Jean-Marc Burniaux & John P. Martin & Giuseppe Nicoletti & Joaquim Oliveira Martins, 1992. "GREEN a Multi-Sector, Multi-Region General Equilibrium Model for Quantifying the Costs of Curbing CO2 Emissions: A Technical Manual," OECD Economics Department Working Papers 116, OECD Publishing.
    3. Alan Manne & Richard Richels, 1992. "Buying Greenhouse Insurance: The Economic Costs of CO2 Emission Limits," MIT Press Books, The MIT Press, edition 1, volume 1, number 026213280x, December.
    4. repec:bla:scandj:v:95:y:1993:i:3:p:257-78 is not listed on IDEAS
    5. John Pezzey, 1992. "Analysis of Unilateral CO, Control in the European Community and OECD," The Energy Journal, , vol. 13(3), pages 159-171, July.
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    Cited by:

    1. World Bank, 2004. "Energy Policies and the Mexican Economy," World Bank Publications - Reports 20247, The World Bank Group.

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