Strategic Behavior and the Environment > Vol 7 > Issue 3–4

Unilateral Emission Pricing and OPEC's Behaviour

Christoph Böhringer, University of Oldenburg, Germany, christoph.boehringer@uni-oldenburg.de Knut Einar Rosendahl, Norwegian University of Life Science, Norway, knut.einar.rosendahl@nmbu.no Jan Schneider, University of Oldenburg, Germany, jan.schneider@uni-oldenburg.de
 
Suggested Citation
Christoph Böhringer, Knut Einar Rosendahl and Jan Schneider (2018), "Unilateral Emission Pricing and OPEC's Behaviour", Strategic Behavior and the Environment: Vol. 7: No. 3–4, pp 225-280. http://dx.doi.org/10.1561/102.00000077

Published: 12 Feb 2018
© 2018 C. Böhringer, K. E. Rosendahl and J. Schneider
 
Subjects
Environmental Economics,  Environmental Economics:Climate Change
 
Keywords
JEL Codes: C72Q41Q54
Carbon leakageOil marketOPEC behaviour
 

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In this article:
Introduction
Literature Review
Model and Data
Base-Year Statistics
Policy Scenarios and Simulation Results
Simulation Results
Conclusions
Appendix A
Appendix B
References

Abstract

Unilateral climate policies involve the risk of carbon leakage, driven by price changes in the oil market and other international markets. We have shown in previous analysis that OPEC may have an incentive to increase the oil price as a response to EU climate policy, thereby retaining resource rents and turning leakage through the oil market negative. In this paper, we examine the implications of OPEC's strategic responses more thoroughly by extending our former analysis along four key dimensions: (i) the size of the climate coalition, (ii) the size of the oil cartel, (iii) oil–gas price linkages in the EU and Japan, and (iv) subsidies for oil consumption within OPEC. We show that the coalition or cartel size critically affects the scope for rent seeking and leakage reduction, whereas oil–gas price linkages in the EU and Japan or subsidies within OPEC do not alter the findings of our previous analysis.

DOI:10.1561/102.00000077

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Strategic Behavior and the Environment, Volume 7, Issue 3-4 International Environmental Agreements: Articles Overiew
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