Does the distribution of emission permits matter for international competitiveness?

Florent Pratlong ()
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Florent Pratlong: ERASME - Équipe de Recherche en Analyse des Systèmes et Modélisation Économique - Ecole Centrale Paris

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Abstract: This paper analyzes the implications of the distribution of emission permits related to a strategic environmental policy and shows how it alters the competitive relation among firms in the international product market. Our model introduces permits trading into the Brander-Spencer [1985] framework. It analyzes a class of two stages Cournot game involving two governments (Home and Foreign) and their respective industry. It shows the incentive for the Home government to distort is initial distribution of permits from the first-best rule to achieve trade-related policy objectives, enabling its domestic producers to improve their market shares. We establish that the Home government implements a higher distribution of permits than the optimal level.

Keywords: strategic policy; international oligopoly; tradable emission permits; permis d'émission négociables; politique stratégique; oligopole international (search for similar items in EconPapers)
Date: 2005-01
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00193472
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Published in 2005

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