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| Antoniou, Fabio; Hatzipanayotou, Panos; Koundouri, Phoebe. |
| We construct a strategic trade model of an international duopoly, whereby production by exporting firms generates a local pollutant. Governments use environmental policies, i.e., an emissions standard or a tax, to control pollution and for rent shifting purposes. Contrary to their firm, however, governments are unable to perfectly foresee the actual level of demand, the cost of abatement and the damage caused from pollution. Under these modes of uncertainty we derive sufficient conditions under which the governments optimally choose an emissions tax over an emissions standard. |
| Tipo: Working or Discussion Paper |
Palavras-chave: Strategic Environmental Policy; Pollution; Choice of Policy Instrument; Uncertainty; Environmental Economics and Policy; F12; F18; Q58. |
| Ano: 2010 |
URL: http://purl.umn.edu/59375 |
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| Antoniou, Fabio; Hatzipanayotou, Panos; Koundouri, Phoebe. |
| In this paper we examine an alternative policy scenario, where governments allow polluting firms 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... |
| Tipo: Working or Discussion Paper |
Palavras-chave: Strategic Environmental Policy; Tradable Permits; Race to the top; Environmental Economics and Policy; Q58; F12; F18. |
| Ano: 2010 |
URL: http://purl.umn.edu/59374 |
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