Emissions trading of global and local pollutants, pollution havens and free riding

Emilson Silva and Xie Zhu

Journal of Environmental Economics and Management, 2009, vol. 58, issue 2, 169-182

Abstract: In the presence of local (sulfur) and global (carbon) pollutants, we examine the pollution haven hypothesis and free riding behavior. Under domestic emissions trading, poorer Southern countries become pollution havens when free trade opens up whenever sulfur damage functions are linear or when sulfur levels in equilibrium are not higher in the South. With global trading of carbon permits, the pollution haven effect emerges in equilibrium whenever the convex sulfur damage functions are nonlinear. Countries that do not participate in a Global Protocol designed to reduce carbon emissions enjoy double benefits, stemming from free riding and cleaner local environments.

Keywords: Emissions; trading; Pollution; haven; Global; and; local; pollutants; Free; riding (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (27)

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