Strategic delegation and international permit markets: Why linking may fail

Author
Habla, Wolfgang · Winkler, Ralph
Published 2017
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Abstract

We analyse a principal-agent relationship in the context of international climate policy. Principals in two countries first decide whether to merge domestic emission permit markets to an international market, then delegate the domestic permit supply to an agent. We find that principals select agents caring less for environmental damages than they do themselves in case of an international market regime, while they opt for self-representation in case of domestic markets. This strategic delegation incentive renders the linking of permit markets less attractive and constitutes a novel explanation for the reluctance to establish non-cooperative international permit markets.

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Details

Title
Strategic delegation and international permit markets: Why linking may fail
Author
Habla, Wolfgang · Winkler, Ralph
Year
2017
Published
2017
Type
Research Paper
Language
eng
Keywords
Non-cooperative Climate Policy · Political Economy · Emissions Trading · Linking Of Permit Markets · Strategic Delegation · Models Of Political Processes: Rent-Seeking, Elections, Legislatures, And Voting Behavior · Externalities · Redistributive Effects · Environmental Taxes And Subsidies · Public Goods · Climate · Natural Disasters · Global Warming · Government Policy
This is Version 1 of this record. We added this version on August 6, 2017. This version is based on an original data import from RePEc.