Climate agreements under limited participation, asymmetric information and market imperfections: A summary of a Dr.polit. Thesis
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- CICERO Reports 
Marginal abatement costs differ among countries. A climate treaty that specifies fixed emissions reductions for the different countries that participate will therefore, in general, not achieve a cost-effective distribution of abatement across countries. International taxes on carbon dioxide (CO2), tradable quotas and joint implementation (or other kinds of sidepayments) have often been suggested as policy instruments in an international climate treaty because they can reduce the total cost of achieving a certain global target for emissions relative to "fixed reduction" types of agreements. The cost-effectiveness of taxes, tradable quotas and joint implementation or other kinds of side-payments may be reduced in the case of limited participation in the climate treaty, asymmetric information and market imperfections. The thesis points out how these factors influence the cost-effectiveness and the optimal design of the policy instruments.