Abstract
In the case of emission of non-uniformly dispersed pollutants such as SO2 the negative effects depend on the location of the sources. A unit increase at one source must be compensated by either a larger or smaller reduction at another source to keep the negative effects at the same level. Emission trading between countries is possible under the Second Sulphur Protocol. Exchange rate trading and third party problems are studied within a simultaneous model facilitating impositions of various environmental constraints. Simulations based on the negotiated emission quotas are offered. Results indicate potential cost savings of 19%.
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Førsund, F.R., NÆvdal, E. Efficiency Gains Under Exchange-Rate Emission Trading. Environmental and Resource Economics 12, 403–423 (1998). https://doi.org/10.1023/A:1008247511950
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DOI: https://doi.org/10.1023/A:1008247511950