Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/171526
Authors: 
MacKenzie, Ian A.
Year of Publication: 
2008
Series/Report no.: 
Economics Working Paper Series 08/83
Abstract: 
This paper investigates the sequential announcement of domestic emissions caps by regulators in a federal or international-based tradable pollution permit market for a transboundary pollutant. A leader-follower framework is used to analyse the consequences of regulators sequentially announcing domestic allocation caps. We find the sequential choice of domestic allocation caps is sub-optimal and depends on the follower's reaction to the leader's choice. Furthermore, the marginal damage and the degree to which allocations are substitutes or complements affects whether the leader changes from being a net permit buyer (seller) of permits to a seller (buyer).
Subjects: 
Initial allocation
international tradable permit market
leader-follower
JEL: 
D78
L13
Q28
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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