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From Pollution-Heaven to Green-Growth
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TitleFrom Pollution-Heaven to Green-Growth  
AuthorTang Weiqi, Wu Libo and Qian Haoqi  
OrganizationFudan University;; 
Key WordsCarbon Market; Permits Allocation; Industrial Transfer; Structural Change; Multi-regional CGE 
AbstractA national carbon market is planned for the 13th FYP period in China. With emission trading, the location of emitters are no longer bounded by the initial assignment of emission targets, and is internalized to the potential trend of economic growth and restructuring. Note the fact that China is going through rapid economic restructuring and relocation: energy- and emission-intensive sectors are moving from high-income eastern coastal areas to lower-income mid and western areas of China. Whether emission trading would intensify this trend and cause pollution-heaven in lower-income regions? Is there a proper design of trading mechanism that can mitigate pollution-heaven effect and lead to a more harmonized growth pattern across regions? In order to answer these questions, we established a theoretical general-equilibrium model to analyze the incentives of alternative design of emission reduction policies to emitters; and on that basis, we established an inter-regional CGE model of China to test the results of the theoretical model in the context of Chinese economic structure. We concluded that, compared with regional intensity target, emission trading can mitigate pollution-heaven effect in mid- and western-regions, while the effect can be further amplified when the emission permits are initially allocated among emitters by auction.  
Serial NumberWP959 
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