Advanced Search
MyIDEAS: Login to save this paper or follow this series

Emissions Trading: ERCs or Allowances

Contents:

Author Info

  • Donald N. Dewees

Abstract

There are two principal choices of the baseline from which emissions trading may take place: 1) emission reduction credits (ERCs) in which the baseline is existing regulations which are often activity-based; and 2) cap-and-trade which specified the total allowable emissions. This paper examines the effects of these two tradable permit systems on marginal and average costs for the firm, using electricity generation as an example. The ERC system subsidises the activity level to which it is tied, failing to incorporate the full cost of external harm into the product price. The cap-and-trade system is more efficient.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.economics.utoronto.ca/public/workingPapers/UT-ECIPA-DEWEES-00-01.pdf
File Function: Main Text
Download Restriction: no

Bibliographic Info

Paper provided by University of Toronto, Department of Economics in its series Working Papers with number dewees-00-01.

as in new window
Length: 37 pages
Date of creation: 11 Jul 2000
Date of revision:
Handle: RePEc:tor:tecipa:dewees-00-01

Contact details of provider:
Postal: 150 St. George Street, Toronto, Ontario
Phone: (416) 978-5283

Related research

Keywords: air pollution; emissions trading; allowances; emission reduction credits; cap and trade; electricity generation; externality;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
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.:
as in new window
  1. Montgomery, W. David, 1972. "Markets in licenses and efficient pollution control programs," Journal of Economic Theory, Elsevier, Elsevier, vol. 5(3), pages 395-418, December.
  2. Reinert, Kenneth A. & Ratick, Samuel J., 1988. "A note on estimating a long-run average cost curve for flue gas desulfurization," Journal of Environmental Economics and Management, Elsevier, vol. 15(1), pages 30-34, March.
  3. Michael Ari Prager & Thomas H. Klier & Richard H. Mattoon, 1996. "A mixed bag: assessment of market performance and firm trading behavior in the NOx RECLAIM program," Working Paper Series, Regional Economic Issues, Federal Reserve Bank of Chicago WP-96-12, Federal Reserve Bank of Chicago.
  4. M. L. Weitzman, 1973. "Prices vs. Quantities," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 106, Massachusetts Institute of Technology (MIT), Department of Economics.
  5. Helfand, Gloria E, 1991. "Standards versus Standards: The Effects of Different Pollution Restrictions," American Economic Review, American Economic Association, American Economic Association, vol. 81(3), pages 622-34, June.
  6. Joskow, Paul L & Schmalensee, Richard & Bailey, Elizabeth M, 1998. "The Market for Sulfur Dioxide Emissions," American Economic Review, American Economic Association, American Economic Association, vol. 88(4), pages 669-85, September.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Jan-Tjeerd Boom & Bouwe Dijkstra, 2009. "Permit Trading and Credit Trading: A Comparison of Cap-Based and Rate-Based Emissions Trading Under Perfect and Imperfect Competition," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 44(1), pages 107-136, September.
  2. Neil J. Buckley & R. Andrew Muller & Stuart Mestelman, 2005. "Baseline-and-Credit Emission Permit Trading: Experimental Evidence Under Variable Output Capacity," Department of Economics Working Papers 2005-03, McMaster University.
  3. Woodward, Richard T., 2011. "Double-dipping in environmental markets," Journal of Environmental Economics and Management, Elsevier, vol. 61(2), pages 153-169, March.
  4. Donald N. Dewees, 2003. "Price and Environment in Electricity Restructuring," Working Papers, University of Toronto, Department of Economics dewees-01-01, University of Toronto, Department of Economics.
  5. John Pezzey, 2003. "Emission Taxes and Tradeable Permits A Comparison of Views on Long-Run Efficiency," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 26(2), pages 329-342, October.
  6. Muller, Adrian & Sterner, Thomas, 2009. "Output and Abatement Effects of Allocation Readjustment in Permit Trade," Working Papers in Economics, University of Gothenburg, Department of Economics 413, University of Gothenburg, Department of Economics.
  7. Evy Crals & Lode Vereeck, 2005. "Taxes, Tradable Rights and Transaction Costs," European Journal of Law and Economics, Springer, Springer, vol. 20(2), pages 199-223, September.
  8. R. Andrew Muller, 1999. "Emissions trading without a quantity constraint," Department of Economics Working Papers 1999-13, McMaster University.
  9. de, Vries Frans & Dijkstra, Bouwe R & McGinty, Matthew, 2011. "Emissions Trading and Intersectoral Dynamics: Absolute versus Relative Design Schemes," Stirling Economics Discussion Papers, University of Stirling, Division of Economics 2011-15, University of Stirling, Division of Economics.
  10. Neil J. Buckley & R. Andrew Muller & Stuart Mestelman, 2005. "Baseline-and-Credit Style Emission Trading Mechanisms: An Experimental Investigation of Economic Inefficiency," Department of Economics Working Papers 2005-04, McMaster University.
  11. Woodward, Richard T. & Han, Manseung, 2004. "Double Dipping In Pollution Markets," 2004 Annual meeting, August 1-4, Denver, CO, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) 20323, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  12. Neil J. Buckley, 2004. "Short-Run Implications of Cap-and-Trade versus Baseline-and-Credit Emission Trading Plans: Experimental Evidence," Department of Economics Working Papers 2004-05, McMaster University.
  13. V. Oikonomou & C. Jepma, 2008. "A framework on interactions of climate and energy policy instruments," Mitigation and Adaptation Strategies for Global Change, Springer, Springer, vol. 13(2), pages 131-156, February.
  14. Neil J. Buckley & R. Andrew Muller & Stuart Mestelman, 2004. "Cap-and-Trade versus Baseline-and-Credit Emission Trading Plans: Experimental Evidence Under Variable Output Capacity," McMaster Experimental Economics Laboratory Publications, McMaster University 2004-06, McMaster University.
  15. Neil J. Buckley, 2004. "Short-Run Implications of Cap-and-Trade versus Baseline-and-Credit Emission Trading Plans: Experimental Evidence," McMaster Experimental Economics Laboratory Publications, McMaster University 2004-03, McMaster University.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:tor:tecipa:dewees-00-01. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (RePEc Maintainer).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.