Does the distribution of emission permits matter for international competitiveness?

Florent Pratlong ()
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Florent Pratlong: ERASME-Ecole Centrale de Paris, EUREQua and PRISM-LASI, http://eurequa.univ-paris1.fr

Cahiers de la Maison des Sciences Economiques from Université Panthéon-Sorbonne (Paris 1)

Abstract: This paper analyzes the implications of the distribution of emission permits related to a strategic environmental policy and shows how it alters the competitive relation among firms in the international product market. Our model introduces permits trading into the Brander-Spencer [1985] framework. It analyzes a class of two stages Cournot game involving two governments (Home and Foreign) and their respective industry. It shows the incentive for the Home government to distort is initial distribution of permits from the first-best rule to achieve trade-related policy objectives, enabling its domestic producers to improve their market shares. We establish that the Home government implements a higher distribution of permits than the optimal level

Keywords: Tradable emission permits; international oligopoly; strategic policy (search for similar items in EconPapers)
JEL-codes: F13 F18 Q28 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2005-01
New Economics Papers: this item is included in nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:mse:wpsorb:v05011

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