Environmental Management Policy under International Carbon Leakage

Kazuharu Kiyono and Jota Ishikawa

Global COE Hi-Stat Discussion Paper Series from Institute of Economic Research, Hitotsubashi University

Abstract: This paper studies environmental management policy when two fossil-fuel-consuming countries non-cooperatively regulate greenhouse-gas emissions through emission taxes or quotas. The presence of carbon leakage caused by fuel-price changes affects the tax-quota equivalence. We explore each country's incentive to choose an environment regulation instrument within a framework of a two-stage policy choice game and find subgame-perfect Nash equilibria. This sheds a new light on the question of why adopted policy instruments could be different among countries. We also analyze the welfare effect of creating an international market for emission permits. International trade in emission permits may not benefit the fuel-consuming countries.

Keywords: Global Warming; Carbon Leakage; Emission Tax; Emission Quota; Tax-quota Equivalence; Emission Trading (search for similar items in EconPapers)
JEL-codes: F18 (search for similar items in EconPapers)
Date: 2011-09
New Economics Papers: this item is included in nep-ene, nep-env and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://gcoe.ier.hit-u.ac.jp/research/discussion/2008/pdf/gd11-204.pdf (application/pdf)

Related works:
Journal Article: ENVIRONMENTAL MANAGEMENT POLICY UNDER INTERNATIONAL CARBON LEAKAGE (2013)
Working Paper: Environmental Management Policy under International Carbon Leakage (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:hst:ghsdps:gd11-204

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