Enforcement and environmental quality in a decentralized emission trading system

Arbeitspapier

This paper addresses the issue of whether the powers of monitoring compliance and allocating tradeable emissions allowances within a federation of countries should be appointed to a unique federal regulator or decentralized to several local regulators. To this end, we develop a two stage game played by environmental regulator(s) and the polluting industries of two countries. Regulator(s) choose the amount of emission allowances to be issued and set the level of monitoring effort to achieve full compliance, while regulated firms choose actual emissions and the number of permits to be held. We identify various, possibly conflicting, spillovers among states in a decentralized setting. We show that cost advantage in favor of local regulators is not sufficient to justify decentralization. Nevertheless, cost differential in monitoring violations can imply lower emissions and greater welfare under a decentralized institutional setting than under a centralized one. However, while a better environmental quality under decentralization is a sufficient condition for higher welfare under the same regime, it is not also a necessary condition.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Nota di Lavoro ; No. 97.2008

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Trade and Environment ; Illegal Behavior and the Enforcement of Law ; Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
• Thema: Emissions Trading ; Environmental Federalism ; Enforcement ; Monitoring Cost

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): D'Amato, Alessio ; Valentini, Edilio
• Ereignis: Veröffentlichung
• (wer): Fondazione Eni Enrico Mattei (FEEM)
• (wo): Milano
• (wann): 2008

Weitere Informationen

• Handle: http://hdl.handle.net/10419/53177
• Letzte Aktualisierung: 10.03.2025, 11:43 MEZ