Institut for Statskundskab

A Blind Eye to Industry-Level Corruption: The Risk of Favoring Domestic Industries in the EU ETS

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We investigate the risk of favouring domestic industries in the current European
Union Emission Trading System (EU ETS). As the EU forms a weak federal
structure compared to the US, there is a risk that single countries may free ride on
the others by choosing to take a blind eye to industry-level corruption when
tempted to favour their own industries. In other words, the optimal level of
national cheating may not take into account the external cost it imposes upon other countries and the risk of wide-scale cheating and the possibility of an EU ETS
collapse. Such national incentives to cheat correspond to a well-known
transnational externality problem from international environmental problems and
multiplayer prisoners’ dilemma games. Thus, there is a strong need for systematic
empirical analysis of whether cheating actually occurs in the EU ETS as predicted
by theory.
TidsskriftEnergy & Environment
Sider (fra-til)263-80
Antal sider18
StatusUdgivet - 2014


  • European Union, emission trading, enforcement, corruption, US Acid Rain Program, EU ETS

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