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Is Emission Trading Beneficial?

Author

Listed:
  • Jota Ishikawa
  • Kazuharu Kiyono
  • Morihiro Yomogida

Abstract

We develop a two-country (North and South), two-good, general equilibrium model of international trade in goods and explore the effects of domestic and international emission trading under free trade in goods. Whereas domestic emission trading in North may result in carbon leakage by expanding South's production of the emission-intensive good, international emission trading may induce North to expand the production of the emission-intensive good by importing emission permits. Emission trading may deteriorate global environment. North's (South's) emission trading may not benefit South (North). International emission trading improves global efficiency but may not benefit both countries.

Suggested Citation

  • Jota Ishikawa & Kazuharu Kiyono & Morihiro Yomogida, 2011. "Is Emission Trading Beneficial?," Global COE Hi-Stat Discussion Paper Series gd10-180, Institute of Economic Research, Hitotsubashi University.
  • Handle: RePEc:hst:ghsdps:gd10-180
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    File URL: http://gcoe.ier.hit-u.ac.jp/research/discussion/2008/pdf/gd10-180.pdf
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    References listed on IDEAS

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    1. Markusen, James R. & Morey, Edward R. & Olewiler, Nancy, 1995. "Competition in regional environmental policies when plant locations are endogenous," Journal of Public Economics, Elsevier, pages 55-77.
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    Cited by:

    1. Roberto Veneziani & Naoki Yoshihara, 2010. "Exploitation and Profits: A General Axiomatic Approach in Convex Economies with Heterogeneous Agents," UMASS Amherst Economics Working Papers 2010-12, University of Massachusetts Amherst, Department of Economics.
    2. Kazuharu Kiyono & Jota Ishikawa, 2013. "Environmental Management Policy Under International Carbon Leakage," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 54, pages 1057-1083, August.
    3. ISHIKAWA Jota & OKUBO Toshihiro, 2013. "Greenhouse Gas Emission Controls and Firm Locations in North-South Trade," Discussion papers 13045, Research Institute of Economy, Trade and Industry (RIETI).
    4. repec:kap:enreec:v:67:y:2017:i:4:d:10.1007_s10640-015-9991-0 is not listed on IDEAS
    5. Xiao Chen & Alan Woodland, 2013. "International trade and climate change," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(3), pages 381-413, June.
    6. Shiro Takeda & Toshi H. Arimura & Makoto Sugino, 2015. "Labor Market Distortions and Welfare-Decreasing International Emissions Trading," Working Papers 1422, Waseda University, Faculty of Political Science and Economics.
    7. Yoshiaki Nakada, 2017. "The energy price - commodity output relationship and the commodity price - commodity output relationship in a three-factor, two-good general equilibrium trade model with imported energy," Papers 1711.10096, arXiv.org.

    More about this item

    Keywords

    global warming; emission quota; emission trading; carbon leakage; Kyoto Protocol;

    JEL classification:

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

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