Enforcing Emissions Trading when Emissions Permits are Bankable
AbstractWe propose enforcement strategies for emissions trading programs with bankable emissions permits that guarantee complete compliance with minimal enforcement costs. Our strategies emphasize imperfect monitoring supported by a high unit penalty for reporting violations, and tying this penalty directly to equilibrium permit prices. This approach is quite different from several existing enforcement strategies that emphasize high unit penalties for emissions in excess of permit holdings. Our analysis suggests that a high penalty for excess emissions cannot be used to conserve monitoring effort, and that it may actually increase the amount of monitoring necessary to maintain compliance. Copyright Springer Science+Business Media, Inc. 2005
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Bibliographic InfoArticle provided by Springer in its journal Journal of Regulatory Economics.
Volume (Year): 28 (2005)
Issue (Month): 2 (09)
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Web page: http://www.springerlink.com/link.asp?id=100298
compliance; enforcement; emissions trading; permit banking; L51; Q28;
Find related papers by JEL classification:
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
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- Juan Pablo Montero, 2002.
"The Temporal Efficiency of SO2 Emissions Trading,"
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225, Instituto de Economia. Pontificia Universidad Católica de Chile..
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