Bottom-up linking of carbon markets under far-sighted cap coordination and reversibility

Heitzig, Jobst; Kornek, Ulrike

doi:10.1038/s41558-018-0079-z

Cited by 10 publications

(6 citation statements)

References 26 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…In addition, we analyze a more realistic setting with asymmetric jurisdictions. The paper most closely related to our work is Heitzig and Kornek [15], which analyzed linking CAT markets by using a probabilistic EPCF. The authors considered a scenario with six jurisdictions-China, Europe, former Soviet Union, India, Japan, and the U.S.-and assumed that each jurisdiction has the same level of farsightedness.…”

Section: Literature Reviewmentioning

confidence: 99%

Stable Linking of the Emission Permit Markets

Sošić

2023

Sustainability

View full text Add to dashboard Cite

The linking of emission permit markets allows participants in different systems to purchase allowances from each other for the purpose of domestic compliance. A recent paper studied the efficiency gains generated in multilateral linkings between permit markets, and concluded that, despite the linking of all jurisdictions maximizing gains, it is not likely to emerge as it is not the most preferred option by all participants. We formulate the linking problem as a cooperative game and show that the linking of all jurisdictions satisfies core stability criteria. Thus, no subset of jurisdictions would benefit from creating their separate market, and the gains will be maximized. We then extend our analysis to arbitrary partitions and farsightedness level and analyze the stable linking of markets between Australia, Canada, the EU, South Korea, and the U.S. Our results indicate that the most likely stable configuration includes a market that links Australia, the EU, and the U.S., and another in which Canada is linked with South Korea. This scenario leaves about 15% of the potential gains unrealized. To mitigate this issue, we suggest that efficiency gains from market linkage be allocated according to the Shapley value, in which case our results suggest that we would see stable linking of all five jurisdictions and thus increase the efficiency.

show abstract

Section: Literature Reviewmentioning

confidence: 99%

Stable Linking of the Emission Permit Markets

Sošić

2023

Sustainability

View full text Add to dashboard Cite

show abstract

“…This leads to further pessimism and causes groups to accept their fate. Heitzig and Kornek (2018) studied a related situation, in which countries expect that if they do not take part in a coalition, others might, showing that this implied once again poor prospects for collaboration. However, they also show that in a dynamic setting, an efficient coalition is achieved when players are sufficiently far-sighted or there is an immediate coordination caps right after market linkage.…”

Section: The Role Of Institutions In Climate Changementioning

confidence: 99%

Behavior, decisions and ecological transition: experimental approaches with policy implications

Antonioni

Cabrales

Lipari

et al. 2022

CICE

View full text Add to dashboard Cite

One key aspect of the ecological transition has to do with individuals’ and collective behavior and its impact on climate change and decarbonization. We will describe how these questions can be studied by proper experimental designs by focusing on two examples: the implementation of Nordhaus's climate club idea for making countries contribute to climate change mitigation, and the interplay between the perception of the risk of a climatic catastrophe and the social norms arising from, and influencing, individual behavior. We will draw conclusions of the outcome of the experiments that can be relevant for policy making.

show abstract

“…The possible role of delinking in affecting market outcomes is considered also by Heitzig and Kornek (2018). Using a game theoretical model of far-sighted coalition formation and allowing for reversible agreements (i.e.…”

Section: Theoretical Aspects Of Delinkingmentioning

confidence: 99%

Getting Married (and Divorced): A Critical Review of the Literature on (De)linking Emissions Trading Schemes

Borghesi

Zhu

2020

SBE

View full text Add to dashboard Cite

Carbon pricing in general and emissions trading in particular are gaining momentum at the world level. In recent years increasing attention has been devoted to the possibility of linking Emissions Trading Schemes (ETSs). The purpose of the present paper is to critically discuss the main findings emerging from the theoretical economic literature on linking and to draw lessons from the practical experiences of linking (and delinking). Both theoretical and empirical studies suggest that linking ETSs implies strategic interaction and requires substantial coordination between participants. Based on the theoretical literature and on the (un)successful attempts of linking existing ETSs, the present paper provides policy insights into the opportunity of linking in the real world, highlighting the similarity between linking/delinking and getting married/divorced.

show abstract

Bottom-up linking of carbon markets under far-sighted cap coordination and reversibility

Cited by 10 publications

References 26 publications

Stable Linking of the Emission Permit Markets

Stable Linking of the Emission Permit Markets

Behavior, decisions and ecological transition: experimental approaches with policy implications

Getting Married (and Divorced): A Critical Review of the Literature on (De)linking Emissions Trading Schemes

Contact Info

Product

Resources

About