The Political Economy of International Emissions Trading Scheme Choice: A Theoretical Analysis

Jan-Tjeerd Boom and Gert Svendsen

Journal of Institutional and Theoretical Economics (JITE), 2000, vol. 156, issue 4, 548-

Abstract: The Kyoto Protocol allows emissions trading between the Annex B countries. We consider three schemes of emissions trading: government trading, permit trading, and credit trading. The schemes are compared in a public choice setting focusing on group size and rent-seeking by interest groups. We find that industry will have most influence on government policy, with environmental organizations taking second place. Our conclusion is that most interest groups prefer a combination of government trading and credit trading even though permit trading is more efficient. Furthermore, some governments prefer government trading because it retains the possibility of hot air trading.

JEL-codes: H41 Q25 Q28 (search for similar items in EconPapers)
Date: 2000
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