Coasian economics and the management of international aviation emissions

The recent decision by the EU Parliament supporting an emissions tax and subsequent carbon trading scheme for European airlines provides the structural foundation for an exploration of the role of Coasian economics in emissions abatements in the international aviation industry. The paper begins by outlining Pigouvian taxation in aviation and considers, from a business context, the potential reaction of international air transport operations. It is argued that the tenets underlying Coasian approaches to negotiated or bargained optimum pollution levels is an alterative lens through which emissions controls can be viewed, although such an approach is perhaps not entirely efficient due to the presence of significant transaction costs, complex regulatory environments governing access.