JavaScript is Disabled
Your browser's JavaScript functionality is disabled. It has to be enabled to use this function of ConfTool.
Here you can find information on how to enable JavaScript
If you have any problems, please contact the organizers at programme@eaere.org.

Conference Agenda

Overview and details of the sessions of this conference. Please select a date or location to show only sessions at that day or location. Please select a single session for detailed view (with abstracts and downloads if available).

Please note that all times are shown in the time zone of the conference. The current conference time is: 10th Sept 2026, 07:07:57pm CEST (Norway)

External resources will be made available 30 min before a session starts. You may have to reload the page to access the resources.

Daily Overview

Session

Climate change mitigation: emissions trading and standards
Location: Auditorium L: Ingrid Simonnæs
Session Chair: Arthur WILLEMAERS, Université de Pau et des Pays de l'adour

Presentation 4

Strategic Effects of Carbon Pricing, Free Allocation, and Border Adjustments on Investment, Emissions, and Competitiveness

Arthur Willemaers^1,2, Joe Tharakan², Patrice Cassagnard¹

1: Université de Pau et des Pays de l'adour, France; 2: Université de Liège, Belgium

Discussant: Costanza Tomaselli (Imperial College Business School)

This paper examines the strategic effects of carbon pricing, free allocation, and the Carbon Border Adjustment Mechanism (CBAM) on firms’ investment decisions, emissions, and competitiveness within the European Union Emissions Trading System (EU ETS). Using a Cournot competition framework, we analyze how different regulatory settings influence domestic and foreign firms’ incentives to invest in green technologies and adjust production levels.

Our findings reveal that carbon pricing has a non-monotonic impact on domestic green investment: at low price levels, firms increase investment, but at higher prices, output contraction and strategic interactions with foreign competitors offset these gains. Free allocation mitigates the competitiveness effects of carbon pricing but introduces complex trade-offs, as it can lead to higher global emissions when foreign producers operate with sufficiently low emissions intensity. In contrast, CBAM serves as a more effective tool for preventing carbon leakage, incentivizing both domestic and foreign investment in green technologies, and reducing global emissions—though at the cost of lower total output and reduced consumer welfare.

These results highlight the importance of carefully calibrating carbon pricing instruments to balance emissions reductions, firm competitiveness, and consumer welfare. Our analysis provides key insights into the transition from free allocation to CBAM and its implications for the future of international climate policy.