Starting in 2005, the EU will implement a CO<Subscript>2</Subscript> emissions trading scheme. We show that the outspoken objectives of economic efficiency and free allocation of allowances are incompatible with harmonized allocation rules. The latter would be necessary to avoid unequal changes of the financial...</subscript>

<Para ID="Par1">We investigate political economy determinants of energy tax differentiation across industries. Based on a theoretical common agency model, we show that differences in the ease of energy demand reductions across industries explain the pattern of tax differentiation: if the government is...</para>

Carbon leakage provides an efficiency argument for differentiated emission prices in favor of emission-intensive and trade-exposed sectors under unilateral climate policy. However, differential emission pricing can be used as a beggar-thy-neighbor policy to exploit terms of trade. Adopting an...

Starting in 2005, the EU will implement a CO2 emissions trading scheme. In this paper we show that the outspoken goals of economic efficiency and free allocation of allowances are incompatible with harmonized allocation rules. In general, the assignment of allowances is endogenous and differs...

For reasons of political feasibility, emission trading systems may have to rely on free initial allocation of emission allowances in order to ameliorate adverse production and employment effects in dirty industries. Against the background of an emerging European-wide emission trading system, we...

This paper discusses fundamental aspects of the European emissions trading system which has been implemented in January 2005. We show how institutional features set by the EU Commission and the required subsidiary decisions by the respective Member States are potentially in conflict with the...

Carbon control policies in OECD countries commonly differentiate emission prices in favor of energy-intensive industries. While leakage provides a efficiency argument for differential emission pricing, the latter may be a disguised beggar-thy-neighbor policy to exploit terms of trade. Using an...

Carbon leakage provides an efficiency argument for unilateral climate policy to differentiate emission prices in favor of emission-intensive and trade-exposed sectors. At the same time, differential emission pricing can be (mis-)used as a beggar-thy-neighbor policy to exploit terms of trade....