Multiregional Markal-Macro: Introduction of CO Certificate Trade and Solution Concepts

In this paper we investigate trade of CO emission permits in the framework of a competitive economic equilibrium. For this purpose we integrate well established regional models called Markal-Macro [Manne and Wene1992, Ahn1992] in one multi-regional CGE model. Emphasize is put on doing as few changes as possible in the existing formulation of the regional models. Based on two possible integration schemes we discuss two solving concepts which are in a sense dual to each other. We conclude by presenting numerical results of three CGE models: a small one used for testing purposes, a medium model with modified Markal-Macro agents based on a reduced data set, and finally a model with modified Markal-Macro agents and the full data sets.