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The Effect of Local and Global Pollution Mandates on a Nonrenewable Resource


  • Amigues, Jean-Pierre

    () (Toulouse School of Economics)

  • Chakravorty, Ujjayant

    () (University of Alberta, Department of Economics)

  • Moreaux, Michel

    () (Toulouse School of Economics)


Many regions such as the European Union and states in the U.S. have introduced mandates aimed at restricting carbon emissions. On the other hand, the stated goal of the Intergovernmental Panel on Climate Change (IPCC) which provides the science behind the current global climate negotiations is to stabilize the atmospheric stock of carbon. How do these multiple pollution control efforts interact when the same nonrenewable resource (e.g., coal) creates the externality? In this paper we show that environmental mandates that aim to reduce emissions and those aiming to limit the stock of pollution, may not compliment each other. For example, a stricter emissions mandate may actually increase the global pollution stock and hasten the date when the global pollution mandate becomes binding. A stricter local mandate will lead to the global mandate binding for a longer time period and a delay in the eventual transition to a clean substitute.

Suggested Citation

  • Amigues, Jean-Pierre & Chakravorty, Ujjayant & Moreaux, Michel, 2010. "The Effect of Local and Global Pollution Mandates on a Nonrenewable Resource," Working Papers 2010-2, University of Alberta, Department of Economics, revised 01 Oct 2010.
  • Handle: RePEc:ris:albaec:2010_002

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    References listed on IDEAS

    1. List, John A. & Mason, Charles F., 2001. "Optimal Institutional Arrangements for Transboundary Pollutants in a Second-Best World: Evidence from a Differential Game with Asymmetric Players," Journal of Environmental Economics and Management, Elsevier, vol. 42(3), pages 277-296, November.
    2. Chakravorty, Ujjayant & Magne, Bertrand & Moreaux, Michel, 2006. "A Hotelling model with a ceiling on the stock of pollution," Journal of Economic Dynamics and Control, Elsevier, vol. 30(12), pages 2875-2904, December.
    3. Amigues, Jean-Pierre & Favard, Pascal & Gaudet, Gerard & Moreaux, Michel, 1998. "On the Optimal Order of Natural Resource Use When the Capacity of the Inexhaustible Substitute Is Limited," Journal of Economic Theory, Elsevier, vol. 80(1), pages 153-170, May.
    4. Jeffrey A. Frankel, 2009. "An Elaborated Global Climate Policy Architecture: Specific Formulas and Emission Targets for All Countries in All Decades," NBER Working Papers 14876, National Bureau of Economic Research, Inc.
    5. Caplan, Arthur J. & Silva, Emilson C.D., 2005. "An efficient mechanism to control correlated externalities: redistributive transfers and the coexistence of regional and global pollution permit markets," Journal of Environmental Economics and Management, Elsevier, vol. 49(1), pages 68-82, January.
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    Cited by:

    1. van der Werf, Edwin & Di Maria, Corrado, 2012. "Imperfect Environmental Policy and Polluting Emissions: The Green Paradox and Beyond," International Review of Environmental and Resource Economics, now publishers, vol. 6(2), pages 153-194, March.

    More about this item


    dynamics; environmental regulation; externalities; resource allocation; energy markets;

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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