Working Papers in Economics, Department of Economics, University of Bergen
Coalition formation and strategic permit trade under the Kyoto Protocol
() and Frode Meland
Abstract: This paper discusses coalition formation with side
payments in markets for transferable property rights where strategic agents
prevail on both sides of the market. Our concern is emissions permit
trading under the Kyoto Protocol. While a seller cartel is not profitable,
our analysis indicates that coalitions between sellers and buyers pay off.
Three stable cartels are found. None involve all agents, yet they all
induce overall e˘ ciency. To support a stable coalition, the EU, Japan and
Canada may pay together between 0 and 13 billion US dollars per year to
Russia. The permit price and society-wide emission reductions are nil.
Keywords: Emissions trading; Kyoto Protocol; cartel formation; merger profitability.; (follow links to similar papers)
JEL-Codes: C71; C72; Q58; (follow links to similar papers)
25 pages, April 1, 2011
Before downloading any of the electronic versions below
you should read our statement on
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Full text versions of the paper:
Questions (including download problems) about the papers in this series should be directed to Kjell Erik Lommerud ()
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Design by Joachim Ekebom