In the standard setting a system of tradable permits is effective and cost-efficient in attaining the policy objective of pollution reduction. This outcome is challenged in case of a tradable permit system in a federal system/constitution with individual states having discretionary power...

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...

Many countries are implementing or at least considering policies to counter increasingly certain negative impacts from climate change. An increasing amount of research has been devoted to the analysis of the costs of climate change and its mitigation, as well as to the design of policies, such...

This paper addresses transboundary environmental problems in the context of an optimal tax problem, when part of the labor force is mobile across countries. The policy instruments include both commodity taxation and nonlinear income taxation. We show how the tax policy in a noncooperative...

Political feasibility of emission trading systems may crucially depend on the free initial allocation of emission allowances to energy-intensive industries in order to ameliorate adverse production and employment effects. We investigate the potential trade-off between such compensation and...

Cap and trade mechanisms enjoy increasing importance in environmental legislation worldwide. The most prominent example is probably given by the European Union Emission Trading System (EU ETS) designed to limit emissions of greenhouse gases, several other countries already have or are planning...

This paper explores the relationship between environmental protection and international capital movements, when tax policy is endogenous (through voting). A two-period general equilibrium model of a small open economy is specified to compare the effects of two different constitutions (commitment...

This paper develops a simulation model in order to examine the effectiveness of state attempts at redistribution under a variety of migration elasticity assumptions. Key outputs from the simulation include the impact of tax-induced migration on state revenues, excess burden, and fiscal...

In 2005, an EU-wide emissions trading scheme covering major CO2 producing sites shall come into power. The key objective of the trading scheme is to promote cost-efficiency of carbon reduction within the EU. We identify policy-relevant tradeoffs between overall efficiency, compensation and...

In 2005, an EU-wide emissions trading scheme covering major CO2 producing sites shall come into power. The key objective of the trading scheme is to promote cost-efficiency of carbon reduction within the EU. We identify policy-relevant tradeoffs between overall efficiency, compensation and...