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Moral Concerns on Tradable Pollution Permits in International Environmental Agreements

  • Eyckmans, Johan

    ()

    (Hogeschool-Universiteit Brussel)

  • Kverndokk, Snorre

    ()

    (Ragnar Frisch Centre for Economic Research)

We investigate how moral concerns about permit trading affect an endogenous pollution permit trading equilibrium, where governments choose non-cooperatively the amount of permits they allocate to domestic industries. Politicians may feel reluctant to allow permit trading and/or may prefer that abatement is undertaken domestically due to moral concerns. This will have an effect on the initial permit allocations, and, therefore, on global emissions. The impact on global emissions depends on the precise formulation of the moral concerns, but under reasonable assumptions, we show that global emissions may increase. Thus, doing what is perceived as good does not always yield the desired outcome. However, this can be offset by restrictions on permit trading when governments have moral concerns about this trade.

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File URL: https://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2009/Memo-13-2009.pdf
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Paper provided by Oslo University, Department of Economics in its series Memorandum with number 13/2009.

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Length: 31 pages
Date of creation: 25 Jun 2009
Publication status: Published in Ecological Economics, 2010, pages 1814-1823.
Handle: RePEc:hhs:osloec:2009_013
Contact details of provider: Postal:
Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway

Phone: 22 85 51 27
Fax: 22 85 50 35
Web page: http://www.oekonomi.uio.no/indexe.html
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