International Trade in Oil, Gas and Carbon Emission Rights: An Intertemporal General Equilibrium Model*

Alan Manne and Thomas F. Rutherford

The Energy Journal, 1994, vol. 15, issue 1, 57-76

Abstract: This paper employs a five-region intertemporal model to examine three issues related to carbon emission restrictions. First, we investigate the possible impact of such limits upon future oil prices. We show that carbon limits are likely to differ in their near- and long-term impact. Second, we analyze the problem of “leakage†which could arise if the OECD countries were to adopt unilateral limits upon carbon emissions. Third, we quantify some of the gains from trade in carbon emission rights. Each of these issues have been studied before, but to our knowledge this is the first study based on a multi-regional, forward-looking model. We show that sequential joint maximization can be an effective way to compute equilibria for intertemporal general equilibrium models of international trade.

Keywords: Oil; natural gas; trade; carbon emission rights; CGE model (search for similar items in EconPapers)
Date: 1994
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Journal Article: International Trade in Oil, Gas and Carbon Emission Rights: An Intertemporal General Equilibrium Model (1994)
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Persistent link: https://EconPapers.repec.org/RePEc:sae:enejou:v:15:y:1994:i:1:p:57-76

DOI: 10.5547/ISSN0195-6574-EJ-Vol15-No1-4

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