Lurking in the Shadows: The Impact of Emissions Target Setting on Carbon Pricing and Environmental Efficiency

18 Pages Posted: 18 Jun 2021 Last revised: 24 Jul 2021

See all articles by Barry Quinn

Barry Quinn

Queen's University Management School

Ronan Gallagher

University of Edinburgh - Edinburgh Business School

Timo Kuosmanen

Aalto University School of Business

Date Written: June 18, 2021

Abstract

This paper examines the impact of Kyoto Protocol target setting regime on environmental efficiency and carbon shadow pricing. We extract shadow price estimates and efficiency scores from a comprehensive dataset of 125 countries in the first Kyoto commitment period (2008-2012) using a stochastic non-parametric estimation framework. We estimate CO2 marginal abatement costs which: are significantly higher for target setting countries; increase over the sample period, and are an order of magnitude greater than the prevailing emissions pricing mechanisms. Our findings provide insights into the consequences of policies to curb unwanted by-products in a regulated system and shed light on the price efficiency of carbon markets.

Suggested Citation

Quinn, Barry and Gallagher, Ronan and Kuosmanen, Timo, Lurking in the Shadows: The Impact of Emissions Target Setting on Carbon Pricing and Environmental Efficiency (June 18, 2021). QMS Research Paper 2021/05, Available at SSRN: https://ssrn.com/abstract=3869545 or http://dx.doi.org/10.2139/ssrn.3869545

Barry Quinn (Contact Author)

Queen's University Management School ( email )

Riddel Hall
185 Stranmillis Road
Belfast, BT9 5EE
United Kingdom

HOME PAGE: http://www.barryquinn.com

Ronan Gallagher

University of Edinburgh - Edinburgh Business School ( email )

29 Buccleuch Pl
Edinburgh, Scotland EH8 9JS
United Kingdom

Timo Kuosmanen

Aalto University School of Business ( email )

P.O. Box 1210
Runeberginkatu 22-24
Helsinki, Finland 00101
Finland

HOME PAGE: http://www.aalto.fi

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