Emission permit trading with a self-interested regulator

Palokangas T (2019). Emission permit trading with a self-interested regulator. Environmental Economics and Policy Studies DOI:10.1007/s10018-019-00236-8. (In Press)

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Abstract

I examine the welfare effects of emission permit trading in an economy where the use of energy in production generates welfare-harming emissions, there is a regulator that sets industry-specific emission permits and the industries influence the regulator by paying political contributions. I show that policy with nontraded emission permits establishes aggregate production efficiency. Emission permit trading hampers efficiency and welfare by increasing the use of emitting inputs in dirty and decreasing that in clean industries.

Item Type: Article
Uncontrolled Keywords: Emission caps, Emission permit trading, Command-and-control instruments, Common agency games
Research Programs: Advanced Systems Analysis (ASA)
Depositing User: Luke Kirwan
Date Deposited: 21 Jan 2019 06:58
Last Modified: 21 Jan 2019 06:58
URI: http://pure.iiasa.ac.at/15697

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