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Tradable Emission Permits in a Federal System

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  • Harrie A. A Verbon
  • Cees A. Withagen

Abstract

A system of tradable permits in the standard setting is effective in attaining the policy objective with regard to pollution reduction at the least cost. This outcome is challenged in case of a tradable permit system in a federal state with individual states having discretionary power regarding environmental policy and where pollution is transboundary across states. This paper explores the opportunities of the central authority to influence the effectiveness of the system, under different institutional arrangements, through the initial allocation of permits.

Suggested Citation

  • Harrie A. A Verbon & Cees A. Withagen, 2005. "Tradable Emission Permits in a Federal System," CESifo Working Paper Series 1482, CESifo.
    • Handle: RePEc:ces:ceswps:_1482
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp1482.pdf
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    References listed on IDEAS

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    Cited by:

    1. Gonzales-Eiras, Martín & Niepelt, Dirk, 2004. "Sustaining Social Security," Seminar Papers 731, Stockholm University, Institute for International Economic Studies.

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    More about this item

    Keywords

    tradable permits; trade bans; fiscal federalism;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q00 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - General

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