Emissions trading to combat climate change: The impact of scheme design on transaction costs
AbstractThis paper explores the likely impact of emissions trading design on transaction costs. Transaction costs include both the costs for the private sector to comply with the scheme rules and the costs of scheme administration. In economic theory transaction costs are often assumed to be zero. But transaction costs are real costs and there is no reason for treating them differently to other costs. Thus, in setting up an emissions trading scheme, transaction costs have to be taken into account in order to recommend a cost efficient design. In this paper, we compare transaction costs of different schemes such as the European Emissions Trading Scheme and the Clean Development Mechanism (CDM) to asses the hypothesis that cap and trade schemes have lower transaction costs than project-based mechanisms such as the CDM.
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Bibliographic InfoPaper provided by Australian Agricultural and Resource Economics Society in its series 2005 Conference (49th), February 9-11, 2005, Coff's Harbour, Australia with number 139304.
Date of creation: 2006
Date of revision:
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Climate policy; emission trading; transaction costs; New institutional Economics; European Emissions Trading Scheme; Clean Development Mechanism; Environmental Economics and Policy;
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