Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/217268
Authors: 
Arvaniti, Maria
Habla, Wolfgang
Year of Publication: 
2020
Series/Report no.: 
ZEW Discussion Papers No. 20-020
Abstract: 
International carbon markets are frequently propagated as an efficient instrument for reducing CO2 emissions. We argue that such markets, despite their desirable efficiency properties, might not be in the best interest of governments who are guided by strategic considerations in negotiations. We identify the circumstances under which governments benefit or are harmed by cooperation in the form of an international market. Our results challenge the conventional wisdom that an international market is most beneficial for participating countries when they have vastly diverging marginal abatement costs; rather, it may be more promising to negotiate agreements with non-tradable emissions caps.
Subjects: 
cooperative climate policy
political economy
emissions trading
linking of permit markets
strategic delegation
strategic voting
JEL: 
D72
H23
H41
Q54
Q58
Document Type: 
Working Paper

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