Adverse Selection and Emissions Offsets
AbstractPrograms where firms sell emissions ``offsets'' to reduce their emissions continue to provide important complementsto traditional environmental regulations. However in many cases, particularly with current and prospective climate change policy, they continue to be very�controversial. The problem of adverse selection lies at the heart of this controversy, as critics of�offset programs continue to produce evidence that these projects are paying firms for actions they�would have undertaken anyway, and are not producing ``additional'' reductions. This paper explores�the theoretical sources of non-additional offsets. �An important distinction arises between sales that indicate adverse selection and those that reveal information about aggregate emissions levels.��
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Bibliographic InfoPaper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 32736.
Date of creation: 06 Apr 2011
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adverse selection; Emissions Markets; Offsets; Climate Policy;
Find related papers by JEL classification:
- G12 - Financial Economics - - General Financial Markets - - - Asset Pricing
- Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-04-23 (All new papers)
- NEP-CTA-2011-04-23 (Contract Theory & Applications)
- NEP-ENE-2011-04-23 (Energy Economics)
- NEP-ENV-2011-04-23 (Environmental Economics)
- NEP-REG-2011-04-23 (Regulation)
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