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Linking permit markets multilaterally

Baran Doda, Simon Quemin and Luca Taschini

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We formally study the determinants, magnitude and distribution of efficiency gains generated in multilateral linkages between permit markets. We provide two novel decomposition results for these gains, characterize individual preferences over linking groups and show that our results are largely unaltered with strategic domestic emissions cap selection or when banking and borrowing are allowed. Using the Paris Agreement pledges and power sector emissions data of five countries which all use or considered using both emissions trading and linking, we quantify the efficiency gains. We find that the computed gains can be sizable and are split roughly equally between effort and risk sharing.

Keywords: climate change policy; international emissions trading systems; multilateral linking; effort sharing; risk sharing; ES/K006576/1 (search for similar items in EconPapers)
JEL-codes: F15 H23 Q58 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2019-11-01
New Economics Papers: this item is included in nep-ene, nep-env, nep-ore and nep-reg
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Citations: View citations in EconPapers (9) Track citations by RSS feed

Published in Journal of Environmental Economics and Management, 1, November, 2019, 98. ISSN: 1096-0449

Downloads: (external link)
http://eprints.lse.ac.uk/101670/ Open access version. (application/pdf)

Related works:
Journal Article: Linking permit markets multilaterally (2019) Downloads
Working Paper: Linking Permit Markets Multilaterally (2019) Downloads
Working Paper: Linking Permit Markets Multilaterally (2018) Downloads
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