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Does the distribution of emission permits matter for international competitiveness?

Author

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  • Florent Pratlong

    (ERASME - Équipe de Recherche en Analyse des Systèmes et Modélisation Économique - Ecole Centrale Paris)

Abstract

This paper analyzes the implications of the distribution of emission permits related to a strategic environmental policy and shows how it alters the competitive relation among firms in the international product market. Our model introduces permits trading into the Brander-Spencer [1985] framework. It analyzes a class of two stages Cournot game involving two governments (Home and Foreign) and their respective industry. It shows the incentive for the Home government to distort is initial distribution of permits from the first-best rule to achieve trade-related policy objectives, enabling its domestic producers to improve their market shares. We establish that the Home government implements a higher distribution of permits than the optimal level.

Suggested Citation

  • Florent Pratlong, 2005. "Does the distribution of emission permits matter for international competitiveness?," Post-Print halshs-00193472, HAL.
    • Handle: RePEc:hal:journl:halshs-00193472
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00193472
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    Citations

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    Cited by:

    1. Christos Constantatos & Eleftherios Filippiadis & Eftichios Sartzetakis, 2014. "Using the allocation of emission permits for strategic trade purposes," Journal of Regulatory Economics, Springer, vol. 45(3), pages 259-280, June.
    2. Bueb, Julien & Schwartz, Sonia, 2009. "Permis d’émission négociables et commerce international dans des marchés de concurrence imparfaite," L'Actualité Economique, Société Canadienne de Science Economique, vol. 85(3), pages 303-318, septembre.
    3. Julien Bueb & Sonia Schwartz, 2011. "Strategic manipulation of a pollution permit market and international trade," Journal of Regulatory Economics, Springer, vol. 39(3), pages 313-331, June.

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