POSSIBLE IMPERFECTION OF INTERNATIONAL EMISSIONS TRADING UNDER THE EXISTENCE OF HOT AIR

摘要

This paper develops analytical models of emissions markets in which a large number of homogeneous regulated emitters participate, and analyzes sufficient conditions of initial permit distribution for the emergence of emitters with the market power. The conditions obtained give interesting policy implications for the hot air issue: the possibility of hot air is not just a political debate but also a more fundamental economic issue that is relevant to market efficiency.