Tradable permit allocations and sequential choice

MacKenzie, Ian A. (2011) Tradable permit allocations and sequential choice. Resource and Energy Economics, 33 1: 268-278. doi:10.1016/j.reseneeco.2010.06.004


Author MacKenzie, Ian A.
Title Tradable permit allocations and sequential choice
Journal name Resource and Energy Economics   Check publisher's open access policy
ISSN 0928-7655
1873-0221
Publication date 2011-01-01
Sub-type Article (original research)
DOI 10.1016/j.reseneeco.2010.06.004
Open Access Status Not yet assessed
Volume 33
Issue 1
Start page 268
End page 278
Total pages 11
Place of publication Amsterdam, Netherlands
Publisher Elsevier
Language eng
Abstract This paper investigates initial allocation choices in an international tradable pollution permit market. For two sovereign governments, we compare allocation choices that are either simultaneously or sequentially announced. We show sequential allocation announcements result in higher (lower) aggregate emissions when announcements are strategic substitutes (complements). Whether allocation announcements are strategic substitutes or complements depends on the relationship between the follower’s damage function and governments’ abatement costs. When the marginal damage function is relatively steep (flat), allocation announcements are strategic substitutes (complements). For quadratic abatement costs and damages, sequential announcements provide a higher level of aggregate emissions.
Keyword Initial allocation
International tradable permit market
Stackelberg
Q-Index Code C1
Q-Index Status Provisional Code
Institutional Status Non-UQ

Document type: Journal Article
Sub-type: Article (original research)
Collection: School of Economics Publications
 
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Citation counts: TR Web of Science Citation Count  Cited 8 times in Thomson Reuters Web of Science Article | Citations
Scopus Citation Count Cited 10 times in Scopus Article | Citations
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Created: Fri, 09 Nov 2012, 02:15:12 EST by Alys Hohnen on behalf of School of Economics