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We model a political game in which a policymaker pledges a domestic emissions goal to choose an instrument between carbon pricing and a quota approach. We show that, although the policymaker is presented with an emissions goal proposed from an international environmental agreement, she/he may pledge a more stringent goal than the proposed level. We define this stringent goal as an “ambitious emissions goal.” We show that such a goal preempts the industry’s lobby in the choice of an instrument. Finally, our model extensions show that the policymaker conditionally pledges the ambitious emissions goal, depending on how the emissions trading scheme is designed and how an instrument is chosen.
Keywords:
Ambitious emissions goal,
lobby,
carbon pricing,
quota,
revenue refund,
rent-seeking,
D72,
Q58
© 2021 H. Yamagami, R. Arawatari and T. Hori
2021
H. Yamagami, R. Arawatari and T. Hori
Licensed re-use rights only
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