Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/192524 
Year of Publication: 
2008
Series/Report no.: 
Discussion Papers No. 542
Publisher: 
Statistics Norway, Research Department, Oslo
Abstract: 
Linkage of different countries' domestic permit markets for pollution rights into a single international market alters governments' incentives, and may trigger adjustments of the number of allocated permits. First, this work finds that in a non-cooperative equilibrium, international emissions trading is likely to increase the total emissions. Second, although trading will give a more efficient cross-country allocation of emissions, efficiency may nevertheless fall, because an already inefficiently low abatement level is likely to be further reduced. Third, we find that large countries are likely to experience losses from linking their permit markets to the permit markets of smaller countries.
Subjects: 
Emissions trading
efficiency
non-cooperative games
JEL: 
C72
F53
Q54
Document Type: 
Working Paper

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