Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/155193
Authors: 
Zhang, Zhong Xiang
Year of Publication: 
2001
Series/Report no.: 
Nota di Lavoro, Fondazione Eni Enrico Mattei 30.2001
Abstract: 
This paper investigates the implications of progressively broadening the scope of the market of tradable permits from no emissions trading to full global trading. We start with the no emissions trading case where each Annex I country must individually meet its Kyoto targets. Next, we consider a case where trading of emissions permits is limited to Annex I countries only. We then expand the scope of the market to include all the non-Annex I countries but China. Finally, to investigate the role China plays in bringing down Annex I countries' compliance costs, we further broaden the market to include China into full global trading. Our results clearly demonstrate that the gain of the OECD as a whole increases as the market expands. Our results also show that developing countries themselves benefit from such an expansion too because it not only provides them for additional financial resources, but also helps to cut their baseline carbon emissions by a big margin. By contrast, the former Soviet Union tends to become worse off as the market expands. The potential conflict of interest between the former Soviet Union and developing countries underlines the importance of establishing clear rules of procedure about admitting new entrants before emissions trading begins.
Subjects: 
Emissions trading
clean development mechanism
greenhouse gases
marginal abatement costs
price of permits
JEL: 
Q28
Q25
Q48
Q43
Document Type: 
Working Paper

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