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Sectoral and regional expansion of emissions trading



Knut Einar Rosendahl


We consider an international emissions trading scheme with partial sectoral and regional coverage. Sectoral and regional expansion of the trading scheme is beneficial in aggregate, but not necessarily for individual countries. We simulate international CO2 emission quota markets using marginal abatement cost functions and the Copenhagen 2020 climate policy targets for selected countries that strategically allocate emissions in a bid to manipulate the quota price. Quota exporters and importers generally have conflicting interests about admitting more countries to the trading coalition, and our results indicate that some countries may lose substantially when the coalition expands in terms of new countries. For a given coalition, expanding sectoral coverage makes most countries better off, but some countries (notably the USA and Russia) may lose out due to loss of strategic advantages. In general, exporters tend to have stronger strategic power than importers.


Böhringer, C., Dijkstra, B., & Rosendahl, K. E. (2014). Sectoral and regional expansion of emissions trading. Resource and Energy Economics, 37,

Journal Article Type Article
Publication Date Jan 3, 2014
Deposit Date Jan 22, 2016
Publicly Available Date Jan 22, 2016
Journal Resource and Energy Economics
Print ISSN 0928-7655
Electronic ISSN 0928-7655
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 37
Public URL
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