Under the Kyoto Protocol, industrialized countries committed to emission reductions may fullfil part of their obligations by implementing emission reduction projects in developing countries. In doing so, they make use of the so-called Clean DevelopmentMechanism (CDM). Two important issues...

Tradable emission permits share many characteristics with financial assets. As on financial markets, speculators are likely to be active on large markets for emission permits such as those developing under the Kyoto Protocol. We show how the presence of speculators on a market for emission...

Allocations of tradable greenhouse gases (GHG) emission quotas among countries may take place according to several sharing rules corresponding to a certain perception of equity. For instance, allocating quotas in direct proportion to population, in inverse relation to GDP or according to past...

This paper analyses how the way emission permits are traded -their market microstructure-impacts the optimal policy to be adopted by the environmental agency. The microstructure used is one of a quote driven market type, which characterizes many financial markets: market makers act as...