We estimate a structural model of OECD countries in which GDP and CO2 emissions are endogenous. We use the estimated model to simulate the price of tradable CO2 permits and the efficiency gains from trade. Our estimated prices are high, relative to previous estimates, and the efficiency gains...

The Clean Development Mechanism (CDM) has been proposed as a means of reducing the costs of abating greenhouse gasses, and for assisting developing countries. Although the CDM offers apparent environmental benefits, in addition to benefiting both investors and developing country hosts, it has...

Most environmentalists favor the reduction in CO2 emissions but oppose international trade in emissions permits. Although economic theory provides a strong case in favor of trade in permits, there is little empirical evidence of the size of potential benefits. We estimate a structural model of...