This workshop is intended for researchers and doctoral students in economics who are interested in resource and environmental economics. The webinar is led by a team of researchers composed of Geir B. Asheim (Oslo University), Hassan Benchekroun (McGill University), Sophie Bernard (Polytechnique Montréal), Etienne Billette de Villemeur (Université de Lille, UQAM), Robert Cairns (McGill University), Justin Leroux (HEC Montréal), and Charles Séguin (UQAM).

This workshop on the economics of natural resources and the environment will feature Thor Larson, a doctoral student at the University of California, and Yukihiro Nishimura (Osaka University).

→ This event will be in English.

• Thor Larson, a doctoral student at the University of California
  Rethinking Linking: Effects of Cap-and-Trade Integration on Equilibrium Emissions and Welfare

Abstract

Conventional economic reasoning suggests that linking cap-and-trade programs creates efficiency gains by lowering costs while holding emissions constant. When cap-and-trade programs have price floors or ceilings, however, linking may increase emissions and decrease welfare. I investigate this phenomenon within California and Québec, where cap-and-trade linkage increased emissions by 18.3 million tons CO2e and reduced welfare by $348 million annually – an outcome that was ex-ante foreseeable. A reformed linked market could have remained emissions-neutral while instead increasing welfare by $2 to $33 million annually. I argue that political and institutional frictions prevented such reforms from being implemented, proposing that policy makers prioritized cutting emissions cheaply over equating marginal damages and benefits. Given these constraints, linking with trading ratios remains incentive-compatible and recovers over three-fifths of potential emissions-neutral welfare gains.

• Yukihiro Nishimura (Osaka University).
  Global Public Goods, Income Inequality, and Kantian Equilibrium

Abstract

This paper develops a unified framework for analyzing the provision of global public goods. Building on the logic of the multiplicative Kantian equilibrium, in which agents choose contributions assuming others follow the same maxim according to preference and income, we show how three prominent allocation schemes (tradable-permit Lindahl, ratio cost-sharing, and no-transfer-efficient equilibria) can be represented as a common structure. We then examine how income inequality affects public-good provision across these mechanisms. While the tradable-permit Lindahl equilibrium tends to generate higher aggregate provision as inequality rises, both the ratio equilibrium and the no-transfer-efficient solution exhibit distributional neutrality. Accordingly, in the Kantian expression of the latter two allocations, only differences in preferences matter, as initial endowment differences are neutralized. Finally, we show that tradable permits, regardless of the share of the permits and including the no-transfer-efficient equilibrium, do not necessarily deliver a Pareto improvement over the voluntary-contribution (disagreement) equilibrium from any initial permit assignment. By contrast, the ratio equilibrium can emerge as an outcome that is robust to coalitional deviations under membership-based Kantian behavior.