Kiel Working Papers, Kiel Institute for World Economics
No 1133:
Trading Hot Air The Influence of Permit Allocation Rules, Market Power and the US Withdrawal from the Kyoto Protocol
Gernot Klepper and Sonja Peterson
Abstract: After the conferences in Bonn and Marrakech it is likely
that international emission trading will be realized in the near future.
Major influences on the permit market are the institutional detail, the
participation structure and the treatment of hot air. Different scenarios
do not only differ in their implications for the demand and supply of
permits and thus the permit price, but also in their allocative effects. In
this paper we discuss likely institutional designs for permit allocation in
the hot-air economies and the use of market power and quantify the
resulting effects with and without US partieipation by using the computable
general equilibrium model DART
Keywords: Emission Trading, Hot Air, Permit Allocation, Market Power, Kyoto Protocol, CGE Model, DART; (follow links to similar papers)
JEL-Codes: C68; D58; F18; Q48; (follow links to similar papers)
40 pages, November 2002
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