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 InfoPaper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2005066.
Date of creation: 00 Oct 2005
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- PAOLO COLLA & MARC GERMAIN & VINCENT Van STEENBERGHE, 2012. "Environmental Policy and Speculation on Markets for Emission Permits," Economica, London School of Economics and Political Science, vol. 79(313), pages 152-182, 01.
- 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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