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Emissions Trading and International Trade

In: International Trade, Resource Mobility and Adjustments in a Changing World

Author

Listed:
  • Jota Ishikawa

    (Gakushuin University
    Hitotsubashi Institute for Advanced Study, Hitotsubashi University & RIETI)

  • Kazuharu Kiyono
  • Morihiro Yomogida

    (Sophia University)

Abstract

We explore the effects of international trade in goods and emissions permits on global warming and welfare in a two-country, two-good, general equilibrium model. International commodity trading does not reduce greenhouse gas (GHG) emissions if the comparative advantage stems from differences in per-capita emission allowances; however, it may reduce them if the comparative advantage is also based on differences in technologies. International emissions trading may not mitigate global warming. Whether it improves welfare would depend on how it affects the terms of trade in goods and global warming. A country with a large amount of per-capita emission allowances may import permits and suffer from deterioration in the terms of trade in goods.

Suggested Citation

  • Jota Ishikawa & Kazuharu Kiyono & Morihiro Yomogida, 2024. "Emissions Trading and International Trade," Contributions to Economics, in: Sugata Marjit & Biswajit Mandal (ed.), International Trade, Resource Mobility and Adjustments in a Changing World, chapter 0, pages 147-175, Springer.
    • Handle: RePEc:spr:conchp:978-981-97-5652-0_8
    DOI: 10.1007/978-981-97-5652-0_8
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    Cited by:

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    2. Cheng, Haitao, 2024. "Domestic versus international emissions trading with capital mobility," Resource and Energy Economics, Elsevier, vol. 77(C).

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