Arbeitspapier

On the Effects of Linking Voluntary Cap-and-Trade Systems for CO2 Emissions

Linkage of cap-and-trade systems is typically advocated by economists on a general analogy with the beneficial linking of free-trade areas and on the specific grounds that linkage will ensure cost effectiveness among the linked jurisdictions. An appropriate and widely accepted specification for the damages of carbon dioxide (CO2) emissions within a relatively short (say 5-10 year) period is that marginal damages for each jurisdiction are constant (although they can differ among jurisdictions). With this defensible assumption, the analysis is significantly clarified and yields simple closed-form expressions for all CO2 permit prices. Some implications for linked and unlinked voluntary CO2 cap-and-trade systems are derived and discussed.

Language
Englisch

Bibliographic citation
Series: CESifo Working Paper ; No. 7225

Classification
Wirtschaft
Environmental Economics: General
Valuation of Environmental Effects
Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
Climate; Natural Disasters and Their Management; Global Warming
Environmental Economics: Government Policy
Subject
linkage
cap and trade
pollution
climate change

Event
Geistige Schöpfung
(who)
Weitzman, Martin L.
Holtsmark, Bjart J.
Event
Veröffentlichung
(who)
Center for Economic Studies and ifo Institute (CESifo)
(where)
Munich
(when)
2018

Handle
Last update
10.03.2025, 11:45 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Weitzman, Martin L.
  • Holtsmark, Bjart J.
  • Center for Economic Studies and ifo Institute (CESifo)

Time of origin

  • 2018

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