Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/67822
Authors: 
Nishimura, Yukihiro
Year of Publication: 
2008
Series/Report no.: 
Queen's Economics Department Working Paper 1177
Abstract: 
We consider international negotiations on the level of global pollution, and examine the Lindahl solution which determines the distribution of the pollution permits with unanimous agreement. We show various properties to clarify difficulties to achieve a Pareto efficient allocation as an agreement. The Lindahl solution may result in an unfair allocation, and it does not belong to the $\gamma$-core as in other solutions based on emissions trading. On the other hand, we provide mechanisms that implement the Lindahl solution as the subgame-perfect equilibrium. We also consider the market with region-specific prices as a device to induce second-best Pareto efficient allocations.
Subjects: 
International emissions trading
Global externality
Lindahl equilibrium
Efficiency
Equity
Core
Implementability
Second-best analysis
JEL: 
D61
D62
D63
D78
H87
Q54
Q58
Document Type: 
Working Paper

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