Distributional constraints and efficiency in a tradable permit market
AbstractIt is a well known result that taking distributional constraints into account when allocating tradable permits to different agents can lead to an imperfectly competitive permit market. Hence, the emission target is no longer met at least cost. In this paper we suggest an allocation rule for permits which can handle this problem. If the permits are allocated twice during the same period, and the allocation in the second round is dependent on the market price for permits, this allocation rule can achieve both cost effectiveness and meet specific requirements for cost distribution across agents.
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Bibliographic InfoPaper provided by Oslo University, Department of Economics in its series Memorandum with number 09/2006.
Length: 27 pages
Date of creation: 08 May 2006
Date of revision:
Contact details of provider:
Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Phone: 22 85 51 27
Fax: 22 85 50 35
Web page: http://www.oekonomi.uio.no/indexe.html
More information through EDIRC
Climate Change; Emission Permits; Allocation; Cost Effectiveness; Distributional Constraints;
Find related papers by JEL classification:
- Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Costs; Distributional Effects; Employment Effects
- Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-05-20 (All new papers)
- NEP-COM-2006-05-20 (Industrial Competition)
- NEP-ENE-2006-05-20 (Energy Economics)
- NEP-ENV-2006-05-20 (Environmental Economics)
- NEP-FMK-2006-05-20 (Financial Markets)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Hagem, Cathrine & Westskog, Hege, 1998. "The Design of a Dynamic Tradeable Quota System under Market Imperfections," Journal of Environmental Economics and Management, Elsevier, vol. 36(1), pages 89-107, July.
- Christoph BOhringer & Andreas LOschel, 2003. "Market power and hot air in international emissions trading: the impacts of US withdrawal from the Kyoto Protocol," Applied Economics, Taylor & Francis Journals, vol. 35(6), pages 651-663.
- Lasse Ringius & Asbjørn Torvanger & Arild Underdal, 2002. "Burden Sharing and Fairness Principles in International Climate Policy," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 2(1), pages 1-22, March.
- Cathrine Hagem & Hege Westskog, 2009. "Allocating Tradable Permits on the Basis of Market Price to Achieve Cost Effectiveness," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 42(2), pages 139-149, February.
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