Extending the Sectoral Coverage of an International Emission Trading Scheme

Bouwe R. Dijkstra; Edward Manderson; Tae Yeoun Lee

doi:10.1007/s10640-011-9470-1

Extending the Sectoral Coverage of an International Emission Trading Scheme

Bouwe R. Dijkstra, Edward Manderson, Tae Yeoun Lee

Economics

Research output: Contribution to journal › Article › peer-review

Abstract

In a model inspired by the EU Emissions Trading Scheme, non-cooperative countries allocate their emissions to internationally trading and non-trading sectors. Each country is better off with trading than without, and aggregate welfare is maximized with all sectors in the trading scheme. We analyze the effects of extending the sectoral coverage of the trading scheme in a two-country model with quadratic abatement costs. If only the original trading sector is asymmetric between countries, the welfare change is always positive and the same in both countries. If the original and additional trading sectors are asymmetric, one country might lose, but there is an aggregate welfare gain. If the original trading sector and the non-trading sector are asymmetric, both countries always gain. © 2011 Springer Science+Business Media B.V.

Original language	English
Pages (from-to)	243-266
Number of pages	23
Journal	Environmental and Resource Economics
Volume	50
Issue number	2
DOIs	https://doi.org/10.1007/s10640-011-9470-1
Publication status	Published - Oct 2011

Keywords

EU emission trading scheme
International emission trading
Strategic trade

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.1007/s10640-011-9470-1

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title = "Extending the Sectoral Coverage of an International Emission Trading Scheme",

abstract = "In a model inspired by the EU Emissions Trading Scheme, non-cooperative countries allocate their emissions to internationally trading and non-trading sectors. Each country is better off with trading than without, and aggregate welfare is maximized with all sectors in the trading scheme. We analyze the effects of extending the sectoral coverage of the trading scheme in a two-country model with quadratic abatement costs. If only the original trading sector is asymmetric between countries, the welfare change is always positive and the same in both countries. If the original and additional trading sectors are asymmetric, one country might lose, but there is an aggregate welfare gain. If the original trading sector and the non-trading sector are asymmetric, both countries always gain. {\textcopyright} 2011 Springer Science+Business Media B.V.",

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N2 - In a model inspired by the EU Emissions Trading Scheme, non-cooperative countries allocate their emissions to internationally trading and non-trading sectors. Each country is better off with trading than without, and aggregate welfare is maximized with all sectors in the trading scheme. We analyze the effects of extending the sectoral coverage of the trading scheme in a two-country model with quadratic abatement costs. If only the original trading sector is asymmetric between countries, the welfare change is always positive and the same in both countries. If the original and additional trading sectors are asymmetric, one country might lose, but there is an aggregate welfare gain. If the original trading sector and the non-trading sector are asymmetric, both countries always gain. © 2011 Springer Science+Business Media B.V.

AB - In a model inspired by the EU Emissions Trading Scheme, non-cooperative countries allocate their emissions to internationally trading and non-trading sectors. Each country is better off with trading than without, and aggregate welfare is maximized with all sectors in the trading scheme. We analyze the effects of extending the sectoral coverage of the trading scheme in a two-country model with quadratic abatement costs. If only the original trading sector is asymmetric between countries, the welfare change is always positive and the same in both countries. If the original and additional trading sectors are asymmetric, one country might lose, but there is an aggregate welfare gain. If the original trading sector and the non-trading sector are asymmetric, both countries always gain. © 2011 Springer Science+Business Media B.V.

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KW - Strategic trade

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JO - Environmental and Resource Economics

JF - Environmental and Resource Economics

IS - 2

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Extending the Sectoral Coverage of an International Emission Trading Scheme

Abstract

Keywords

UN SDGs

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