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The efficiency of decentralized environmental policies under global pollution and tradable emission permits

Author

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  • Nikos Tsakiris
  • Panos Hatzipanayotou
  • Michael S. Michael

Abstract

We build a two asymmetric regions model with cross‐border pollution related to production. Each region issues emission permits and revenues from their sales finance public pollution abatement. The decentralized level of emission permits is efficient when permits are interregionally tradable and cross‐border pollution is perfect. This result is robust in a variety of cases—for example, when (i) capital is immobile or internationally mobile or only mobile between the two regions, and (ii) revenue from permits sales is transferred to a federal authority.

Suggested Citation

  • Nikos Tsakiris & Panos Hatzipanayotou & Michael S. Michael, 2018. "The efficiency of decentralized environmental policies under global pollution and tradable emission permits," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 20(4), pages 541-556, August.
    • Handle: RePEc:bla:jpbect:v:20:y:2018:i:4:p:541-556
    DOI: 10.1111/jpet.12296
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    Cited by:

    1. Nikos Tsakiris & Panos Hatzipanayotou & Michael S. Michael, 2022. "Tradable Emission Permits and Strategic Capital Taxation," University of Cyprus Working Papers in Economics 01-2022, University of Cyprus Department of Economics.
    2. Nikos Tsakiris & Panos Hatzipanayotou & Michael S. Michael, 2024. "Strategic capital taxation, tradable emission permits and global pollution," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 57(1), pages 276-296, February.
    3. Cheng, Haitao, 2024. "Domestic versus international emissions trading with capital mobility," Resource and Energy Economics, Elsevier, vol. 77(C).
    4. Nikos Tsakiris & Nikolaos Vlassis, 2024. "Border Carbon Adjustments and Leakage in the Presence of Public Pollution Abatement Activities," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 87(9), pages 2231-2258, September.
    5. Ioanna Pantelaiou & Panos Hatzipanayotou & Panagiotis Konstantinou & Anastasios Xepapadeas, 2020. "Can Cleaner Environment Promote International Trade? Environmental Policies as Export Promoting Mechanisms," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 75(4), pages 809-833, April.

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