| Authors |
Antoniou, F., Hatzipanayotou, P. and Koundouri, P. |
| Title |
Tradable Permits vs Ecological Dumping |
| Abstract |
In this paper we examine an alternative policy scenario, where governments allow polluting Ã??rms to trade permits in a strategic environmental policy model. We demonstrate, among other things, that with no market power in the permits market, governments of the exporting firms do not have an incentive to under-regulate pollution in order to become more competitive. This strategic effect is reversed and leads to a welfare level closer to the cooperative one and strictly higher to that when permits are non-tradable. Allowing for market power in the permits market, the incentive to under-regulate pollution re-appears regardless of whether permits are tradable or not. With tradable permits, however, the incentive to under-regulate pollution is comparatively weaker relative to the case of non-tradable permits. This entails potential benefits for the exporting Ã??rms and countries since the prisonersÃ??dilemma is moderated. |
| Lenght (pages) |
28 |
| Creation Date |
2009-02-01 |
| Keywords |
Strategic environmental policy, Tradable permits, Race to the top |
| Classification JEL |
Q58, F12, F18 |
| File |
Antoniou.pdf (221676 bytes) |
| File-Function |
First version |
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Copyright © 2009 [D.I.E.S.S. A.U.E.B.]. All rights reserved.
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