The paper shows that cost-effective involvement of the source location involves utmost difficulty in practice. Based on the RAINS model, it is recommended that source location should be ignored in a European market for SO2, as is the case in the U.S. Acid Rain Program. The RAINS-model predicts a...

One crucial precondition for the overall achievement of the Kyoto Protocol by 2010 is the participation of the USA. According to political economy theory, big countries have the strongest incentives to provide global collective good provisions. Reality, however, does not seem to follow this...

The EU has committed itself to meet an 8% greenhouse gas (GHG) reduction target level following the Kyoto agreement. Therefore, the EU Commission has just proposed a new directive establishing a framework for GHG emissions trading within the European Union. This proposal is the outcome of a...

Why did the climate negotiations in The Hague fail? Our contribution is to argue that the conflict between the European Union and the United States stems mainly from disagreement on the cost issue. We argue that three main concerns promoted by the European Union in The Hague, i.e. a 50% national...

The purpose of this article is to analyse whether the presence of surplus emission allowance trading jeopardizes the environmental target of an international environmental agreement. We argue that surplus emission allowance trading can be used as an implicit side-payment mechanism to actually...

CDM projects have large potentials but also face significant obstacles that have so far limited their applicability. Two serious problems that an effective contracting faces are the presence of private information and the lack of sufficiently precise output measures. In a principal-agent...