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http://hdl.handle.net/10419/43491
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| Title: | | Tradable permits vs. ecological dumping  |
| Authors: | | Antoniou, Fabio Hatzipanayotou, Panos Koundouri, Phoebe |
| Issue Date: | | 2010 |
| Series/Report no.: | | Nota di lavoro // Fondazione Eni Enrico Mattei: Sustainable Development 2010,2 |
| Abstract: | | In this paper we examine an alternative policy scenario, where governments allow polluting firms to trade permits in a strategic environmental policy model. We demonstrate, among other things, that with no market power in the permits market, governments of the exporting firms do not have an incentive to under-regulate pollution in order to become more competitive. This strategic effect is reversed and leads to a welfare level closer to the cooperative one and strictly higher to that when permits are non-tradable. Allowing for market power in the permits market, the incentive to under-regulate pollution re-appears regardless of whether permits are tradable or not. With tradable permits, however, the incentive to under-regulate pollution is comparatively weaker relative to the case of non-tradable permits. This entails potential benefits for the exporting firms and countries since the prisoners' dilemma is moderated. |
| Subjects: | | Strategic Environmental Policy Tradable Permits Race to the top |
| JEL: | | Q58 F12 F18 |
| Document Type: | | Working Paper |
| Appears in Collections: | | FEEM Working Papers, Fondazione Eni Enrico Mattei
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