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Cross Border Abatement and its Welfare Effects

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  • Sabine Aresin

Abstract

This paper examines the Clean Development Mechanism (CDM) of the Kyoto Protocol and its welfare implications for the countries engaging in it. It uses a simultaneous public good game, the public good being emission abatement, to asses the impact of the CDM on the public good provision equilibrium and on the countries' welfare. Three different cases are considered in this paper. First, a benchmark case without CDM is presented. This is followed by two cases with CDM, which differ in their cost functions: in one a preferential right for emission abatement is granted to Annex I, in the other to Non-Annex I countries. In general, the CDM is welfare increasing, but welfare under the CDM depends on who is granted the preferential right.

Suggested Citation

  • Sabine Aresin, 2013. "Cross Border Abatement and its Welfare Effects," Working Papers tax-mpg-rps-2013-04, Max Planck Institute for Tax Law and Public Finance.
    • Handle: RePEc:mpi:wpaper:tax-mpg-rps-2013-04
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    File URL: http://www.tax.mpg.de/RePEc/mpi/wpaper/TAX-MPG-RPS-2013-04.pdf
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    Citations

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    Cited by:

    1. Sabine Aresin, 2015. "Monitoring Abatement in the Presence of an Import Quota on CERs," Working Papers tax-mpg-rps-2015-11, Max Planck Institute for Tax Law and Public Finance.
    2. Kai A. Konrad & Marcel Thum, 2018. "Does a Clean Development Mechanism Facilitate International Environmental Agreements?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 69(4), pages 837-851, April.
    3. Sabine Aresin, 2015. "Reduced Allowability and the Allocation of Emission Abatement," Working Papers tax-mpg-rps-2015-12, Max Planck Institute for Tax Law and Public Finance.

    More about this item

    Keywords

    Private Provision of a Public good; Clean Development Mechanism; Abatement; Environmental Public Goods;
    All these keywords.

    JEL classification:

    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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