Regionally vs. Non-regionally Tradable Emission Permits under Capital Mobility and Cross-border Pollution
|Speaker:||Panos Hatzipanayotou, Athens University of Economics & Business|
|Date: ||Wednesday 15 January 2014|
|Location: ||Matrix Lecture Theatre, Building One|
This paper constructs a general equilibrium model of a Regional Block (RB) comprising two open economies, transboundary pollution and capital mobility. To control pollution, governments issue either emission permits which are traded by all RB producers in an intra-RB permits market, or emission permits which are traded locally within each RB country, but are non-RB tradable. We analyze, in a strategic setting, the welfare effects of pollution emission permits. We provide their welfare ranking when countries choose these instruments non-cooperatively and cooperatively. We compare the results under emission permits to those when emissions taxes are used to control pollution.