Policy Research Domains (Adjacent Basic Research Areas) A. Institutions Related to Financial and Labor Markets, and New Corporate Law and Governance

Theoretical Examination of Climate Change Policy under Open Economies

Project Leader/Sub-Leader


ISHIKAWA Jota Faculty Fellow



2008 - 2010

Signatories of the Kyoto Protocol are considering and implementing various policies to achieve their reduction goals. Recently, there has been considerable activity in developing a new framework for after the first commitment period. Representative policies for countering global warming include emissions taxes and emissions quotas. These two policies generally yield equivalent results in a closed economy. However, recent theoretical research indicates that equivalency is not achieved in an open economy (for example, see Kiyono and Ishikawa, 2004 and Ishikawa and Kiyono, 2006). Particularly important is the problem of carbon leakage, which points out that while greenhouse gas reduction policies in one country may reduce that country's emissions, this may indirectly increase emissions in other countries. Furthermore, it cannot be said that adequate theoretical research has been conducted concerning the combination of emissions trading and emissions quotas. While emissions trading systems have been tried on various levels, with the exception of the EU, the establishment of large-scale emissions trading systems has been delayed. The purpose of this project is to examine and to gain new perspectives on issues related to the carbon leakage problem and emissions trading systems particularly within the framework of an open economy.

April 25, 2008 - March 31, 2011

Major Research Results


RIETI Discussion Papers


RIETI Discussion Papers