Tradable emission permits share many characteristics with financial assets. As on financial markets, speculators are likely to be active on large markets for emission permits such as those developing under the Kyoto Protocol. We show how the presence of speculators on a market for emission...

This paper investigates the relation between the optimal amount of pollution permits issued by an environmental agency and the mechanisms used to trade these permits in the "secondary market". We show that when permits are traded using a quote-driven mechanism, the total amount of permits to be...

This paper analyzes how the way emission permits are traded-their market microstructure-affects the optimal policy to be adopted by the environmental agency. The microstructure used is one of a quote driven market type, which characterizes many financial markets. Market makers act as...

When modeling the effects of innovation on the marginal abatement cost (MAC) curve, many studies in environmental economics have posited, implicitly or explicitly, a uniform downward shift. The purpose of this paper is to thoroughly investigate this claim in a simple theoretical framework by...

Allocations of tradable greenhouse gases (GHG) emission quotas among countries may take place according to several sharing rules corresponding to a certain perception of equity. For instance, allocating quotas in direct proportion to population, in inverse relation to GDP or according to past...

This paper analyses how the way emission permits are traded -their market microstructure-impacts the optimal policy to be adopted by the environmental agency. The microstructure used is one of a quote driven market type, which characterizes many financial markets: market makers act as...

The literature on the impact of economic instruments (typically taxes and tradable permits) on the level of innovation is usually based on the assumption that innovation reduces the slope of the marginal abatement cost curve. This assumption, which usually leads to the conclusion that taxes...