On the sequential choice of tradable permit allocations
نویسنده
چکیده
This paper investigates the sequential announcement of domestic emissions caps by governments in a international-based tradable pollution permit market for a transboundary pollutant. We nd the sequential choice of domestic allocation caps is sub-optimal and depends on how the follower government reacts to the leader governments choice. Furthermore, the marginal damage and the degree to which allocations are substitutes or complements a¤ects whether the leader changes from being a net permit buyer (seller) of permits to a seller (buyer). JEL Classi cation: D78; L13; Q28
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