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Environmental Management Policy under International Carbon Leakage

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  • Kiyono, Kazuharu
  • 清野, 一治
  • Ishikawa, Jota
  • 石川, 城太

Abstract

This paper studies environmental management policy when two fossil-fuel-consuming countries non-cooperatively regulate greenhouse-gas emissions through emission taxes or quotas. The presence of carbon leakage caused by fuel-price changes affects the tax-quota equivalence. We explore each country's incentive to choose an environment regulation instrument within a framework of a two-stage policy choice game and find subgame-perfect Nash equilibria. This sheds a new light on the question of why adopted policy instruments could be different among countries. We also analyze the welfare effect of creating an international market for emission permits. International trade in emission permits may not benefit the fuel-consuming countries.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Kiyono, Kazuharu & 清野, 一治 & Ishikawa, Jota & 石川, 城太, 2011. "Environmental Management Policy under International Carbon Leakage," CCES Discussion Paper Series 45, Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University.
    • Handle: RePEc:hit:ccesdp:45
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    File URL: https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/19288/070ccesDP_45.pdf
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    References listed on IDEAS

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    Cited by:

    1. Ngo Van Long, 2014. "The Green Paradox in Open Economies," CESifo Working Paper Series 4639, CESifo.
    2. Özge Demiral & Mehmet Demiral & Emine Dilara Aktekin‐Gök, 2022. "Extra‐regional trade and consumption‐based carbon dioxide emissions in the European countries: Is there a carbon leakage?," Sustainable Development, John Wiley & Sons, Ltd., vol. 30(6), pages 1987-2001, December.
    3. By Thomas Eichner & Rüdiger Pethig, 2015. "Self-enforcing international environmental agreements and trade: taxes versus caps," Oxford Economic Papers, Oxford University Press, vol. 67(4), pages 897-917.
    4. Yu-Bong Lai, 2023. "Capital mobility and environmental policy: taxes versus TEP," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 30(2), pages 326-350, April.
    5. Haitao Cheng, 2023. "Consumption pollution and taxes with endogenous firm locations and different market sizes," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 30(6), pages 1601-1632, December.
    6. Jota Ishikawa & Toshihiro Okubo, 2017. "Greenhouse-Gas Emission Controls and Firm Locations in North–South Trade," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 67(4), pages 637-660, August.
    7. Ino, Hiroaki & Matsumura, Toshihiro, 2021. "Optimality of emission pricing policies based on emission intensity targets under imperfect competition," Energy Economics, Elsevier, vol. 98(C).
    8. Akihiko Yanase & Keita Kamei, 2022. "Dynamic Game of International Pollution Control with General Oligopolistic Equilibrium: Neary Meets Dockner and Long," Dynamic Games and Applications, Springer, vol. 12(3), pages 751-783, September.

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    More about this item

    Keywords

    global warming; carbon leakage; emission tax; emission quota; tax-quota equivalence; emission trading;
    All these keywords.

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment

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