The Efficiency, Equity and Politics of Emission Permit Trading

Myrna Wooders and Benjamin Zissimos

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: This paper illustrates that an international permit trading system may hurt relatively poor countries by making associated economic activities unaffordable. A model is constructed in which the free market solution is Pareto inefficient as a result of pollution. The introduction of tradable permits allows pollution to be internalised, and brings about an increase in the total social surplus. But when incomes vary, this may not lead to a Pareto improvement; those in poor countries stop the polluting activity because they cannot afford to do otherwise.

Keywords: TRADE; EFFICIENCY; POVERTY; POLLUTION (search for similar items in EconPapers)
JEL-codes: D45 D62 F18 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2001
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https://warwick.ac.uk/fac/soc/economics/research/workingpapers/2008/twerp586.pdf

Related works:
Working Paper: The efficiency, equity and politics of emissions permit trading (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:586

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