Lapan, H and Sikdar, S (2017) Is Trade in Permits Good for the Environment? Environmental and Resource Economics, 72 (2). pp. 500-510.

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Abstract

We analyze the impact of trade in emission permits on environmental policy when countries trade a differentiated good. Pollution is always higher with tradable permits as compared to the case where permits are not internationally tradable. If pollution is a pure global public bad, i.e., the marginal damage from transboundary pollution is the same as that from local pollution, the permit price under trade equals the domestic marginal damage from own emissions. If pollution is not a pure global public bad, i.e., the marginal damage from transboundary pollution is less than that from local pollution, trade results in a permit price lower than the domestic marginal damage from own emissions—pollution is higher under trade relative to autarky. Regardless of the nature of transboundary pollution, the permit price (equivalent pollution tax) is lower and pollution is higher with internationally tradable permits than with nontradable permits.

Item Type: Article
Additional Information: This is the final published version of the article (version of record). It first appeared online via Springer at https://doi.org/10.1007/s10640-017-0202-z - Please refer to any applicable terms of use of the publisher.
Uncontrolled Keywords: Emission Permit Trade; Strategic environmental policy; Leakage; Intra-industry trade
Subjects: H Social Sciences > H Social Sciences (General)
H Social Sciences > HC Economic History and Conditions
Divisions: Faculty of Humanities and Social Sciences > Keele Management School
Depositing User: Symplectic
Date Deposited: 04 Jan 2018 10:44
Last Modified: 25 Feb 2019 09:51
URI: http://eprints.keele.ac.uk/id/eprint/4325

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