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This paper shows that tradable emissions permits and an emissions tax affect the firms' technology choice differently under uncertainty. A tax encourages the most flexible technology if and only if stochastic costs and the equilibrium permit price have sufficiently strong positive covariance,...
Persistent link: https://www.econbiz.de/10009493372
Authorities often lack information for efficient regulation of the commons. This paper derives a criterion comparing prices versus tradable quantities in terms of expected welfare, given uncertainty, optimal policy and endogenous cost structure. I show that one cannot determine which regulatory...
Persistent link: https://www.econbiz.de/10010720116
Authorities often lack information for efficient regulation of the commons. This paper derives a criterion comparing prices versus tradable quantities in terms of expected welfare, given uncertainty, optimal policy and endogenous cost structure. I show that one cannot determine which regulatory...
Persistent link: https://www.econbiz.de/10010238324
Persistent link: https://www.econbiz.de/10010442921
This paper examines the investment incentives of market-based regulation, with focus on the technology characteristics the different regulatory schemes tend to incentivize. The firms' technology choice is socially optimal if and only if the aggregate emission allowance supply is completely...
Persistent link: https://www.econbiz.de/10014296429
Persistent link: https://www.econbiz.de/10015071354
Persistent link: https://www.econbiz.de/10011514837
This paper shows that tradable emissions permits and an emissions tax have a risk-related technology choice effect. We first examine the first- and second-order moments in the probability distributions of optimal abatement and production under the two instruments. The two instruments will, in...
Persistent link: https://www.econbiz.de/10011968413
This paper shows that tradable emissions permits and an emissions tax affect the firms' technology choice differently under uncertainty. A tax encourages the most flexible technology if and only if stochastic costs and the equilibrium permit price have sufficiently strong positive covariance,...
Persistent link: https://www.econbiz.de/10011968447
Authorities often lack information for efficient regulation of the commons. This paper derives a criterion comparing prices versus tradable quantities in terms of expected welfare, given uncertainty, optimal policy and endogenous cost structure. I show that one cannot determine which regulatory...
Persistent link: https://www.econbiz.de/10011968525