Strategic Behavior and the Environment > Vol 8 > Issue 3

Getting Married (and Divorced): A Critical Review of the Literature on (De)linking Emissions Trading Schemes

Simone Borghesi, European University Institute, Italy and University of Siena, Italy, , Tong Zhu, University of Münster, Germany,
Suggested Citation
Simone Borghesi and Tong Zhu (2020), "Getting Married (and Divorced): A Critical Review of the Literature on (De)linking Emissions Trading Schemes", Strategic Behavior and the Environment: Vol. 8: No. 3, pp 219-267.

Publication Date: 12 Oct 2020
© 2020 S. Borghesi and T. Zhu
Carbon regulation,  Environmental economics,  Public economics,  Economic theory,  Climate change
JEL Codes: F42G15H87Q54Q58
Emissions trading systemsfull linkingrestricted linkingdelinkingcarbon marketscap-and-trade


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In this article:
Types of Linking 
Advantages and Disadvantages of Linking 
Theoretical Studies on Linking and Delinking 
Linking and Delinking in the Real World 
Concluding Remarks on Linking (and Marriages) 


Carbon pricing in general and emissions trading in particular are gaining momentum at the world level. In recent years increasing attention has been devoted to the possibility of linking Emissions Trading Schemes (ETSs). The purpose of the present paper is to critically discuss the main findings emerging from the theoretical economic literature on linking and to draw lessons from the practical experiences of linking (and delinking). Both theoretical and empirical studies suggest that linking ETSs implies strategic interaction and requires substantial coordination between participants. Based on the theoretical literature and on the (un)successful attempts of linking existing ETSs, the present paper provides policy insights into the opportunity of linking in the real world, highlighting the similarity between linking/delinking and getting married/divorced.