The Kyoto Protocol of 1997 attempts to address the problem of global warming by establishing national greenhouse gas emissions targets and timetables. To reduce emissions, the protocol outlines a tradeable pollution permit system. The system would allow countries with high abatement costs to purchase permits from countries with low abatement costs, equalizing global marginal abatement costs. The protocol, however, is destined to fail because of the free-rider problem and the problem of trade leakage. Given the correct guidelines, a tradeable pollution permit system would provide a market-based, cost-effective way to reduce greenhouse gas emissions.
Major Themes in Economics
©2003 by Major Themes in Economics
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"Flaws in the Kyoto Protocol's Pollution Permit System,"
Major Themes in Economics: Vol. 5
, Article 7.
Available at: https://scholarworks.uni.edu/mtie/vol5/iss1/7