«Hot Air» and Market Power in International Emission Trading
In respect to GHG emission reduction targets set in the Kyoto Protocol in 1997, an emission quotas trading system will be implemented among the Annex-1 participating countries to lower the mitigation costs of the international cooperation on climate change issue. Nonetheless, in the way the market was designed, the States of the Former Soviet Union and Eastern Europe are likely to become large sellers of carbon as a result of the drop in emissions level due to economic downturn, referring to «Hot Air». Indeed, these countries may exert substantially a dominant position in the international permits market since the US had decided to withdraw from the Kyoto Protocol. This paper aims to develop a better understanding of the consequence of «Hot Air» in the international carbon emission trading, using some policy variants simulated with the computable general equilibrium GEM-E3 World model. The present analyse focuses particularly on the measures of «Hot Air» and the implications of potential market power in the emission trading market. Under various scenario options, the exercise of market power lead to a misallocation of abatement effort across the remaining Annex-1 countries as a consequence of permits price and welfare effects.
|Date of creation:||Jul 2004|
|Contact details of provider:|| Postal: 106 - 112 boulevard de l'Hôpital, 75647 Paris cedex 13|
Phone: 01 44 07 81 00
Fax: 01 44 07 81 09
Web page: http://mse.univ-paris1.fr/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Eyckmans Johan & van Steenberghe Vincent & Van Regemorter Denise, "undated".
"Is Kyoto Fatally Flawed? An Analysis with MacGEM,"
- Johan Eyckmans & Denise Van Regemorter & Vincent van Steenberghe, 2001. "Is Kyoto fatally flawed? An analysis with MacGEM," Energy, Transport and Environment Working Papers Series ete0118, KU Leuven, Department of Economics - Research Group Energy, Transport and Environment.
- Robert W. Hahn, 1984. "Market Power and Transferable Property Rights," The Quarterly Journal of Economics, Oxford University Press, vol. 99(4), pages 753-765. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:mse:wpsorb:v04074. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Lucie Label)
If references are entirely missing, you can add them using this form.