Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/266184 
Year of Publication: 
2022
Series/Report no.: 
Chemnitz Economic Papers No. 057
Publisher: 
Chemnitz University of Technology, Faculty of Economics and Business Administration, Chemnitz
Abstract: 
We study the endogenous formation of climate coalitions linked to a preferential free trade arrangement. In a multi-stage strategic trade and participation game, coalition and fringe countries dispose of a discriminatory tariff on dirty imports as well as emission permits imposed on domestic producers and traded on a common permit market inside the coalition, or respectively local markets outside. The participation game is solved by Monte-Carlo simulation, while the general equilibrium and the policy game are solved analytically. We find that preferential free trade can create effective climate coalitions in terms of depth and breadth.
Subjects: 
Climate Change
International Environmental Agreements
Preferential Free Trade
Issue Linkage
Emission Permits
JEL: 
Q54
Q56
F18
F15
Q58
Document Type: 
Working Paper

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