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Home country bias in international emissions trading: Evidence from the EU ETS
JournalArticle (Originalarbeit in einer wissenschaftlichen Zeitschrift)
ID 4660701
Author(s) Hintermann, Beat; Ludwig, Markus
Author(s) at UniBasel Hintermann, Beat
Year 2023
Title Home country bias in international emissions trading: Evidence from the EU ETS
Journal Resource and Energy Economics
Volume 71
Pages / Article-Number 101336
Keywords Emission permit market, EU ETS, Transactions costs, gravity model, home bias
Abstract We examine the pattern of allowance trades in the European Union Emissions Trading System (EU ETS) using highly disaggregated trading data and identify a significant and robust home market bias. Our results point to informational transactions costs that increase when trading across national borders. The existing trade pattern in goods and services explains two thirds of the home bias, with the remainder due to other causes. Our finding suggests that firms make use of existing trade networks to overcome search costs in bilateral allowance trade. Since the home bias differs across firms, it follows that marginal abatement costs are not equalized across market participants of the EU ETS.
Publisher Elsevier
ISSN/ISBN 0928-7655 ; 1873-0221
Full Text on edoc Available
Digital Object Identifier DOI 10.1016/j.reseneeco.2022.101336

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