Home Country Bias in International Emissions Trading: Evidence From the EU ETS

Hintermann, Beat and Ludwig, Markus. (2022) Home Country Bias in International Emissions Trading: Evidence From the EU ETS. WWZ Working Paper, 2022 (07). Basel.

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Official URL: https://edoc.unibas.ch/90048/

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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.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Public Economics / Public Finance (Hintermann)
12 Special Collections > WWZ Publications > WWZ Discussion Papers and Working Papers
UniBasel Contributors:Hintermann, Beat and Ludwig, Markus
Item Type:Working Paper
Number of Pages:38
Note:Publication type according to Uni Basel Research Database: Discussion paper / Internet publication
Identification Number:
  • handle: RePEc:bsl:wpaper:2022/07
edoc DOI:
Last Modified:12 Oct 2022 13:26
Deposited On:12 Oct 2022 13:26

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