IDEAS home Printed from https://ideas.repec.org/a/sae/engenv/v25y2014i2p263-279.html

A Blind Eye to Industry-Level Corruption? The Risk of Favouring Domestic Industries in the EU ETS

Author

Listed:
  • Urs Steiner Brandt
  • Gert Tinggaard Svendsen

Abstract

We investigate the risk of favouring domestic industries in the current European Union Emission Trading System (EU ETS). As the EU forms a weak federal structure compared to the US, there is a risk that single countries may free ride on the others by choosing to take a blind eye to industry-level corruption when tempted to favour their own industries. In other words, the optimal level of national cheating may not take into account the external cost it imposes upon other countries and the risk of wide-scale cheating and the possibility of an EU ETS collapse. Such national incentives to cheat correspond to a well-known transnational externality problem from international environmental problems and multiplayer prisoners' dilemma games. Thus, there is a strong need for systematic empirical analysis of whether cheating actually occurs in the EU ETS as predicted by theory.

Suggested Citation

  • Urs Steiner Brandt & Gert Tinggaard Svendsen, 2014. "A Blind Eye to Industry-Level Corruption? The Risk of Favouring Domestic Industries in the EU ETS," Energy & Environment, , vol. 25(2), pages 263-279, April.
    • Handle: RePEc:sae:engenv:v:25:y:2014:i:2:p:263-279
    DOI: 10.1260/0958-305X.25.2.263
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1260/0958-305X.25.2.263
    Download Restriction: no
    File URL: https://libkey.io/10.1260/0958-305X.25.2.263?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54, National Bureau of Economic Research, Inc.
    2. Robert W. Hahn & Robert N. Stavins, 2011. "The Effect of Allowance Allocations on Cap-and-Trade System Performance," Journal of Law and Economics, University of Chicago Press, vol. 54(S4), pages 267-294.
    3. Markussen, Peter & Svendsen, Gert Tinggaard, 2005. "Industry lobbying and the political economy of GHG trade in the European Union," Energy Policy, Elsevier, vol. 33(2), pages 245-255, January.
    4. Sgobbi, Alessandra & Buchner, Barbara K. & Catenacci, Michela, 2007. "Governance and Environmental Policy Integration in Europe: What Can we learn from the EU Emission Trading Scheme?," Climate Change Modelling and Policy Working Papers 9544, Fondazione Eni Enrico Mattei (FEEM).
    5. Morten Vesterdal & Gert Tinggaard Svendsen, 2003. "EU Emission Trading: Starting with Carbon Dioxide," Energy & Environment, , vol. 14(4), pages 397-406, July.
    6. Gert T. Svendsen, 1998. "public choice and environmental regulation," Books, Edward Elgar Publishing, number 1298, June.
    7. Jesper Krogstrup & Gert Tinggaard Svendsen, 2004. "Can the Eu Persuade the Us to Rejoin the Kyoto Agreement?," Energy & Environment, , vol. 15(3), pages 427-435, July.
    8. Ellerman,A. Denny & Joskow,Paul L. & Schmalensee,Richard & Montero,Juan-Pablo & Bailey,Elizabeth M., 2005. "Markets for Clean Air," Cambridge Books, Cambridge University Press, number 9780521023894, Enero-Abr.
      • Ellerman,A. Denny & Joskow,Paul L. & Schmalensee,Richard & Montero,Juan-Pablo & Bailey,Elizabeth M., 2000. "Markets for Clean Air," Cambridge Books, Cambridge University Press, number 9780521660839, Enero-Abr.
    9. Oates, Wallace E. & Schwab, Robert M., 1988. "Economic competition among jurisdictions: efficiency enhancing or distortion inducing?," Journal of Public Economics, Elsevier, vol. 35(3), pages 333-354, April.
    10. Carsten Daugbjerg & Gert Tinggaard Svendsen, 2001. "Green Taxation in Question," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-59553-8, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Richard S.J. Tol, 2018. "Energy and Climate," Working Paper Series 1618, Department of Economics, University of Sussex Business School.
    2. Tol, Richard S.J., 2017. "The structure of the climate debate," Energy Policy, Elsevier, vol. 104(C), pages 431-438.
    3. Boying Li & Yu Hao & Chun-Ping Chang, 2018. "Does an anticorruption campaign deteriorate environmental quality? Evidence from China," Energy & Environment, , vol. 29(1), pages 67-94, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wallace E. Oates & Paul R. Portney & Wallace E. Oates & Paul R. Portney, 2004. "The Political Economy of Environmental Policy," Chapters, in: Environmental Policy and Fiscal Federalism, chapter 1, pages 3-30, Edward Elgar Publishing.
    2. Morten Vesterdal & Gert Tinggaard Svendsen, 2003. "EU Emission Trading: Starting with Carbon Dioxide," Energy & Environment, , vol. 14(4), pages 397-406, July.
    3. Jessika Richter & Luis Mundaca, 2015. "Achieving and maintaining institutional feasibility in emissions trading: the case of New Zealand," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 20(8), pages 1487-1509, December.
    4. Daugbjerg, Carsten & Svendsen, Gert Tinggaard, 2001. "Designing green taxes in a political context: From optimal to feasible environmental regulation," Working Papers 01-17, University of Aarhus, Aarhus School of Business, Department of Economics.
    5. Sato, Misato & Rafaty, Ryan & Calel, Raphael & Grubb, Michael, 2022. "Allocation, allocation, allocation! The political economy of the development of the European Union Emissions Trading System," LSE Research Online Documents on Economics 115431, London School of Economics and Political Science, LSE Library.
    6. Phillia Restiani & Regina Betz, 2010. "A Theoretical Model of Optimal Compliance Decisions under Different Penalty Designs in Emissions Trading Markets," Environmental Economics Research Hub Research Reports 1086, Environmental Economics Research Hub, Crawford School of Public Policy, The Australian National University.
    7. Sven Rudolph & Friedrich Schneider, 2013. "Political barriers of implementing carbon markets in Japan: A Public Choice analysis and the empirical evidence before and after the Fukushima nuclear disaster," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 15(2), pages 211-235, April.
    8. Richard Schmalensee & Robert N. Stavins, 2025. "Policy Evolution under the Clean Air Act," World Scientific Book Chapters, in: Economics of Environment, Climate Change, and Wine Selected Papers of Robert N Stavins Volume 3 (2011–2023), chapter 10, pages 267-298, World Scientific Publishing Co. Pte. Ltd..
    9. Landry, Joel R., 2025. "How heterogeneity in perceived external benefits differently affects federal and state efforts to address climate change," Energy Economics, Elsevier, vol. 146(C).
    10. Helland, Eric, 1998. "The Revealed Preferences of State EPAs: Stringency, Enforcement, and Substitution," Journal of Environmental Economics and Management, Elsevier, vol. 35(3), pages 242-261, May.
    11. James Alm & H. Spencer Banzhaf, 2012. "Designing Economic Instruments For The Environment In A Decentralized Fiscal System," Journal of Economic Surveys, Wiley Blackwell, vol. 26(2), pages 177-202, April.
    12. Richard Schmalensee & Robert N. Stavins, 2025. "The SO2 Allowance Trading System: The Ironic History of a Grand Policy Experiment," World Scientific Book Chapters, in: Economics of Environment, Climate Change, and Wine Selected Papers of Robert N Stavins Volume 3 (2011–2023), chapter 8, pages 209-233, World Scientific Publishing Co. Pte. Ltd..
    13. Urs Steiner Brandt & Gert Tinggaard Svendsen, 2001. "Hot air in Kyoto, cold air in The Hague," Working Papers 22/01, University of Southern Denmark, Department of Sociology, Environmental and Business Economics.
    14. Hilary Sigman, 2011. "Monitoring and Enforcement of Climate Policy," NBER Chapters, in: The Design and Implementation of US Climate Policy, pages 213-225, National Bureau of Economic Research, Inc.
    15. Sven Rudolph & Friedrich Schneider, 2011. "Did the Japanese Patient Follow the Doctor's Orders? Mostly no! A Public Choice Analysis of Greenhouse Gas Emissions Trading Schemes in Japan before and after the Earthquake," CESifo Working Paper Series 3639, CESifo.
    16. Anne Gullberg, 2008. "Rational lobbying and EU climate policy," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 8(2), pages 161-178, June.
    17. Jesper Krogstrup & Gert Tinggaard Svendsen, 2004. "Can the Eu Persuade the Us to Rejoin the Kyoto Agreement?," Energy & Environment, , vol. 15(3), pages 427-435, July.
    18. Henrik Christoffersen & Gert Tinggaard Svendsen, 2002. "Bureaucratic Tax-Seeking: The Danish Waste Tax," Energy & Environment, , vol. 13(3), pages 355-366, July.
    19. Brandt, Urs Steiner & Svendsen, Gert Tinggaard, 2002. "Hot air in Kyoto, cold air in The Hague--the failure of global climate negotiations," Energy Policy, Elsevier, vol. 30(13), pages 1191-1199, October.
    20. Cropper, Maureen L & Oates, Wallace E, 1992. "Environmental Economics: A Survey," Journal of Economic Literature, American Economic Association, vol. 30(2), pages 675-740, June.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:engenv:v:25:y:2014:i:2:p:263-279. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.