Environmental Policy and Speculation on Markets for Emission Permits
AbstractTradable 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 permits affects the price of these permits when firms face risk aversion. The agency in charge of the optimal environmental policy should account for the presence of speculators when determining the total amount of permits to issue.
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Bibliographic InfoArticle provided by London School of Economics and Political Science in its journal Economica.
Volume (Year): 79 (2012)
Issue (Month): 313 (01)
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Other versions of this item:
- COLLA, Paolo & GERMAIN, Marc & VAN STEENBERGHE, Vincent, 2005. "Environmental policy and speculation on markets for emission permits," CORE Discussion Papers 2005066, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Paolo, COLLA & Marc, GERMAIN & Vincent, VAN STEENBERGHE, 2005. "Environmental policy and speculation on markets for emission permits," Discussion Papers (ECON - DÃ©partement des Sciences Economiques) 2005049, Université catholique de Louvain, Département des Sciences Economiques.
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