Spatial equilibrium problems: the carbon leakage effect on cement sector under different environmental policies

Abstract

This paper proposes a Generalized Nash Game problem (GNEP) to study the possible cement production relocation from countries subject to environmental regulation to areas where environmental policies are not applied or are more lenient. This phenomenon takes the name of “carbon leakage” effect. This analysis is based on an oligopolistic partial equilibrium model with a detailed technological representation of the cement market. An existence result for this GNEP is also provided.