Policy-business interaction in emissions trading between multiple regions

Jürgen Scheffran () and Marian Leimbach ()
Additional contact information
Jürgen Scheffran: University of Illinois at Urbana-Campaign
Marian Leimbach: Potsdam Institute for Climate Impact Research

A chapter in Emissions Trading and Business, 2006, pp 353-367 from Springer

Abstract: Abstract Emissions trading helps to bring about emission reductions in regions and business sectors where they are least costly. The cost level highly depends on the absolute level of emission reduction required and the capacity of economies to shift to a carbon-free mode of production. As a framework for understanding this transition and the policy-business interaction, a multi-region framework is used which integrates political decisions on global and regional emission targets, equity considerations, technical choice and the market dynamics of permits. Welfare maximization for each region, subject to production, investment, damage functions and emissions trading costs, results in regional permit threshold prices and a subsequent demand-supply adjustment to an average price. Based on this price, the optimal emission reductions for each region serve as target levels in reaction functions, leading to an iterative dynamic game and Nash equilibria of future emission permits allocation. The model is applied with stylized data for 11 world regions and four cases (business as usual, equal per capita, 10% reductions of baseline, stabilization).

Keywords: Emissions trading; emission reduction; fair allocation; multi-regional dynamic game; Nash equilibrium; price adjustment; reaction function; policy-business interaction; technical choice (search for similar items in EconPapers)
Date: 2006
References: Add references at CitEc
Citations: View citations in EconPapers (1)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-7908-1748-5_23

Ordering information: This item can be ordered from
http://www.springer.com/9783790817485

DOI: 10.1007/3-7908-1748-1_23

Access Statistics for this chapter

More chapters in Springer Books from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().