Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/162849
Authors: 
Habla, Wolfgang
Winkler, Ralph
Year of Publication: 
2017
Series/Report no.: 
ZEW Discussion Papers 17-025
Abstract: 
We analyse a principal-agent relationship in the context of international climate policy. Principals in two countries first decide whether to merge domestic emission permit markets to an international market, then delegate the domestic permit supply to an agent. We find that principals select agents caring less for environmental damages than they do themselves in case of an international market regime, while they opt for self-representation in case of domestic markets. This strategic delegation incentive renders the linking of permit markets less attractive and constitutes a novel explanation for the reluctance to establish non-cooperative international permit markets.
Subjects: 
non-cooperative climate policy
political economy
emissions trading
linking of permit markets
strategic delegation
JEL: 
D72
H23
H41
Q54
Q58
Document Type: 
Working Paper

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