The Burden Sharing of Pollution Abatement Costs in Multi-Regional Open Economies

Raouf Boucekkine () and Germain Marc ()
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Germain Marc: Université Catholique de Louvain

The B.E. Journal of Macroeconomics, 2009, vol. 9, issue 1, 34

Abstract: The burden sharing of pollution abatement costs raises the issue of how the costs are supported by entities (regions or industries) of a country that decides to reduce pollution, e.g., in the Kyoto Protocol context. This paper explores this issue in the framework of a dynamic endogenous growth 2 sectors - 2 regions - 2 inputs Heckscher-Ohlin model of a small open economy with an international tradable permits market. Given an "emission-based grand-fathering" sharing rule, capital accumulation is more negatively affected by the environmental policy in the energy intensive sector if energy and capital are complementary. But the picture could be different in terms of total sectoral revenue, depending on the evolution of prices. Finally, we show that the impact of environmental policy at the regional level depends crucially on the evolution of regional specialization patterns.

Keywords: pollution permits; grand-fathering; sectoral spillovers; multi-regional economy; endogenous growth (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (9)

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Working Paper: The burden sharing of pollution abatement costs in multi-regional open economies (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:bpj:bejmac:v:9:y:2009:i:1:n:21

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DOI: 10.2202/1935-1690.1692

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