Linking Permit Markets Multilaterally
Baran Doda and
Working Papers from Chaire Economie du climat
Linkages between emissions trading systems (ETSs) are crucial for the cost-effective implementation of the Paris Agreement. Yet we know little about the determinants of economic gains in a multilaterally linked system, how they are shared among participating jurisdictions and less still about their magnitude. We characterize these gains for an arbitrary linkage group, decompose them into gains in the group's internal bilateral linkages and prove linkage is superadditive. Relative to autarky linkage reduces permit price volatility on average but not necessarily for individual linkage group members. In a quantitative application calibrated to five hypothetical ETSs covering the power sectors in Canada, continental Europe, South Korea, the UK and the USA, linking generates gains of up to $370 million (constant 2005US$) per year relative to autarky. Focusing on linkage groups with two and three members which are themselves not linked, we find that maximum aggregate gains decline by $43-178 million.
Keywords: Climate change policy; International emissions trading systems; Multilateral linking; Effort and risk sharing (search for similar items in EconPapers)
JEL-codes: F15 H23 Q58 (search for similar items in EconPapers)
Pages: 52 pages
New Economics Papers: this item is included in nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://www.chaireeconomieduclimat.org/RePEc/cec/wp ... -Quemin-Taschini.pdf First version, 2018 (application/pdf)
Journal Article: Linking permit markets multilaterally (2019)
Working Paper: Linking permit markets multilaterally (2019)
Working Paper: Linking Permit Markets Multilaterally (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:cec:wpaper:1804
Access Statistics for this paper
More papers in Working Papers from Chaire Economie du climat
Bibliographic data for series maintained by Chaire Economie du Climat ().