To what extent do the welfare costs associated with the implementation of the Burden Sharing Agreement in the European Union depend on sectoral allocation of emissions rights? What are the prospects for strategic climate policy to favor domestic production? This paper attempts to answer those...

Economic efficiency is a major argument for the inclusion of an international emission permit trading system under the Kyoto Protocol. Using a partial equilibrium framework, energy system models have shown that implementing tradable permits for greenhouse gases internationally could reduce...