«Hot Air» and Market Power in International Emission Trading

Florent Pratlong (), Denise Van Regemorter and Paul Zagamé
Additional contact information
Florent Pratlong: ERASME et EUREQua
Denise Van Regemorter: CES - Katholieke Universiteit Leuven
Paul Zagamé: ERASME et EUREQua

Cahiers de la Maison des Sciences Economiques from Université Panthéon-Sorbonne (Paris 1)

Abstract: In respect to GHG emission reduction targets set in the Kyoto Protocol in 1997, an emission quotas trading system will be implemented among the Annex-1 participating countries to lower the mitigation costs of the international cooperation on climate change issue. Nonetheless, in the way the market was designed, the States of the Former Soviet Union and Eastern Europe are likely to become large sellers of carbon as a result of the drop in emissions level due to economic downturn, referring to «Hot Air». Indeed, these countries may exert substantially a dominant position in the international permits market since the US had decided to withdraw from the Kyoto Protocol. This paper aims to develop a better understanding of the consequence of «Hot Air» in the international carbon emission trading, using some policy variants simulated with the computable general equilibrium GEM-E3 World model. The present analyse focuses particularly on the measures of «Hot Air» and the implications of potential market power in the emission trading market. Under various scenario options, the exercise of market power lead to a misallocation of abatement effort across the remaining Annex-1 countries as a consequence of permits price and welfare effects

Keywords: Emission trading; market power; MECG (search for similar items in EconPapers)
JEL-codes: D43 D58 Q48 (search for similar items in EconPapers)
Pages: 12 pages
Date: 2004-07
New Economics Papers: this item is included in nep-com, nep-ene, nep-env and nep-res
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
ftp://mse.univ-paris1.fr/pub/mse/cahiers2004/V04074.pdf (application/pdf)

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:mse:wpsorb:v04074

Access Statistics for this paper

More papers in Cahiers de la Maison des Sciences Economiques from Université Panthéon-Sorbonne (Paris 1) Contact information at EDIRC.
Bibliographic data for series maintained by Lucie Label ().