On the Strategic Effect of International Permits Trading on Local Pollution
研究两家企业在第三市场古诺竞争时，国际可交易排污权相比不可交易配额会加剧本地污染，并警告区域间连接排污权市场可能损害福利。
We introduce a model of strategic environmental policy where two firms compete à la Cournot in a third market in the presence of multiple pollutants. Two types of pollutants are introduced: a local and a transboundary one. The regulator can only control local pollution as transboundary pollution is regulated internationally. We illustrate that when transboundary pollution is regulated through the use of tradable emission permits instead of non-tradable ones then a new strategic effect appears which has not been identified thus far. In this case, local pollution increases further. We caution that linking permit markets across regions may be welfare detrimental. We also provide evidence from the implementation of EU ETS over the pollution of particulate matters ( $$PM_{10}$$ and $$PM_{2.5})$$ .