Skip to main content

Market power and hot air in international emissions trading: the impacts of US withdrawal from the Kyoto Protocol

Buy Article:

$55.00 plus tax (Refund Policy)


Ten years after the initial Climate Change Convention from Rio in 1992 the industrialized world is finally likely to ratify the Kyoto Protocol, which will impose legally binding greenhouse gas emission reductions on the developed world. However, the Kyoto Protocol will enter into force without the USA, which withdrew under President Bush in March 2001. Accounting for hot air and market power of the Former Soviet Union on emission permit markets, it is shown that US withdrawal has important consequences on environmental effectiveness, compliance costs, and excess costs of market power under the Kyoto Protocol. Non-compliance of the USA implies a dramatic decrease in environmental effectiveness as well as compliance costs of OECD countries whereas the Former Soviet Union and transitional economies in Eastern Europe suffer from a huge decline in permit sales revenues. Excess costs of market power in permit trade increase in relative terms, but decline substantially in absolute terms due to US withdrawal. Policy options are quantified to bypass the problems of hot air and market power through compensation mechanisms.

Document Type: Research Article


Affiliations: Centre for European Economic Research (ZEW), P.O. Box 10 34 43, D-68034 Mannheim, Germany

Publication date: 2003-01-01

More about this publication?
  • Access Key
  • Free content
  • Partial Free content
  • New content
  • Open access content
  • Partial Open access content
  • Subscribed content
  • Partial Subscribed content
  • Free trial content
Cookie Policy
Cookie Policy
Ingenta Connect website makes use of cookies so as to keep track of data that you have filled in. I am Happy with this Find out more