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Linking permit markets multilaterally

Doda, Baran, Quemin, Simon and Taschini, Luca (2019) Linking permit markets multilaterally. Journal of Environmental Economics and Management. ISSN 1096-0449 (In Press)

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Abstract

We formally study the determinants, magnitude and distribution of efficiency gains generated in multilateral linkages between permit markets. We provide two novel decomposition results for these gains, characterize individual preferences over linking groups and show that our results are largely unaltered with strategic domestic emissions cap selection or when banking and borrowing are allowed. Using the Paris Agreement pledges and power sector emissions data of five countries which all use or considered using both emissions trading and linking, we quantify the efficiency gains. We find that the computed gains can be sizable and are split roughly equally between effort and risk sharing.

Item Type: Article
Official URL: https://www.journals.elsevier.com/journal-of-envir...
Additional Information: © 2019 Elsevier Inc
Divisions: Grantham Research Institute
Geography & Environment
Subjects: G Geography. Anthropology. Recreation > GE Environmental Sciences
JEL classification: Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q5 - Environmental Economics > Q58 - Government Policy
H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H23 - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
F - International Economics > F1 - Trade > F15 - Economic Integration
Date Deposited: 19 Sep 2019 15:15
Last Modified: 17 Oct 2019 23:11
URI: http://eprints.lse.ac.uk/id/eprint/101670

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