External balance, dynamic efficiency, and the welfare effects of unilateral and multilateral permit policies in interdependent economies

This paper investigates domestic and foreign welfare effects of unilateral and multilateral permit policies in a two-country overlapping generations model with producer carbon emissions. We show that the welfare effects of a more stringent cap on emissions depend on the external balance of the polic...

Full description

Saved in:
Bibliographic Details
Published in:Economic modelling 2010-09, Vol.27 (5), p.980-990
Main Authors: Bednar–Friedl, Birgit, Farmer, Karl
Format: Article
Language:English
Subjects:
Economic impact
Economic models
Efficiency
Emission permits
Emission permits Trade Overlapping generations Welfare
Emissions control
Emissions trading
Environmental economics
Environmental quality
Overlapping generations
Overlapping-generations model
Pollution control
Studies
Trade
Trade models
Welfare
Welfare costs
Welfare economics
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:This paper investigates domestic and foreign welfare effects of unilateral and multilateral permit policies in a two-country overlapping generations model with producer carbon emissions. We show that the welfare effects of a more stringent cap on emissions depend on the external balance of the policy implementing country, the dynamic (in)efficiency of the world economy, and the preference for environmental quality. Under dynamic efficiency, the global welfare loss of policy implementation in a net foreign creditor country is lower than of a policy in the net foreign debtor country. Moreover, although the country which has unilaterally implemented a permit policy would gain from a multilateral policy, the associated welfare loss for the other country is larger than that of a unilateral policy abroad.
ISSN:0264-9993
1873-6122
DOI:10.1016/j.econmod.2010.05.003