Carbon Emissions Trading and Equity in International Agreements

20 Pages Posted: 3 Mar 2000

See all articles by Francesco Bosello

Francesco Bosello

University of Milan - Department of Economics, Business and Statistics; CMCC - Centro Euro-Mediterraneo sui Cambiamenti Climatici

Roberto Roson

Ca Foscari University of Venice - Dipartimento di Economia; Bocconi University - IEFE Centre for Research on Energy and Environmental Economics and Policy; Loyola Andalucia University

Date Written: July 1999

Abstract

An integrated assessment model is used to simulate the introduction of various emissions trading schemes based on the Kyoto protocol on the reduction of greenhouse emissions. The implications of the various systems in terms of income distribution are illustrated, and it is claimed that the issue of equity should not be regarded as independent of the issue of market efficiency. In particular, in this paper it is shown that (1) changes produced on an equity index by the imposition of emission constraints (by country) are not significantly higher than those obtained by the subsequent introduction of a market mechanism, and (2) that the different market regimes which could be adopted have quite different distributional implications. These results are interpreted as a direct consequence of the fact that a competitive market equilibrium is equivalent to a centralised social welfare maximisation in which the function to be maximised, however, normally differs from the social function used to define equity objectives.

JEL Classification: C5, F1, F4

Suggested Citation

Bosello, Francesco and Roson, Roberto, Carbon Emissions Trading and Equity in International Agreements (July 1999). FEEM Working Paper No. 57.99, Available at SSRN: https://ssrn.com/abstract=200623 or http://dx.doi.org/10.2139/ssrn.200623

Francesco Bosello (Contact Author)

University of Milan - Department of Economics, Business and Statistics

Via Festa del Perdono, 7
Milan, 20122
Italy

CMCC - Centro Euro-Mediterraneo sui Cambiamenti Climatici

via Augusto Imperatore, 16
Lecce, I-73100
Italy

Roberto Roson

Ca Foscari University of Venice - Dipartimento di Economia ( email )

Cannaregio 873
Venice, 30121
Italy
+39 041 2349147 (Phone)
+39 041 2349176 (Fax)

HOME PAGE: http://venus.unive.it/roson

Bocconi University - IEFE Centre for Research on Energy and Environmental Economics and Policy ( email )

viale Filippetti, 9
Milan, 20122
Italy

Loyola Andalucia University ( email )

Escritor Castilla Aguayo no. 4
Cordoba, CORDOBA 14004
Spain

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