Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/119669
Authors: 
Quirion, Philippe
Year of Publication: 
2002
Series/Report no.: 
Nota di Lavoro, Fondazione Eni Enrico Mattei 69.2002
Abstract: 
The Kyoto Protocol on climate change allocates tradable quotas to developed countries, but let them free to choose the means to respect their quota. There are good reasons for a country not to control its firms through internationally tradable permits. We thus compare a tax and purely domestic tradable permits for the European Union, the U.S and Japan. Information on abatement costs and international permit price is imperfect and stems from nine global models. Permits perform better than a tax for Japan and the U.S., whereas both instruments yield a similar outcome for Europe. Applying Weitzman (1974)'s framework in this new context, we show that these results are due to the positive correlation between costs and benefits: models that predict a low abatement cost in one country generally do so in others too, thereby forecasting a low international permit price.
Subjects: 
Climate change
Uncertainty
Policy choice
JEL: 
D81
Q25
Q28
Document Type: 
Working Paper

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