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Emissions Trading and Profitability: The Swedish Pulp and Paper Industry

Author

Listed:
  • Runar Brännlund
  • Yangho Chung
  • Rolf Färe
  • Shawna Grosskopf

Abstract

The purpose of this paper is to develop models with and without potential emissions trading and to compare industry profits under the two regimes. The model in which emissions trading is permitted is a nonparametric industry frontier model in the spirit of Färe et al. (1992). It is relative to this model that industry profit is computed. This profit is compared to the profit without emissions trading to give an estimate of the potential gains that can be realised by allowing for emissions trading. The model, which is applied to data for the Swedish pulp and paper industry, suggests that this industry would have had up to 6% (1%) higher profits in 1989 (1990) if emissions trading had been used instead of individual permits to achieve the same total emissions target. Currently there is no permit trading in this industry so our results only model the potential gains that can be made. Copyright Kluwer Academic Publishers 1998

Suggested Citation

  • Runar Brännlund & Yangho Chung & Rolf Färe & Shawna Grosskopf, 1998. "Emissions Trading and Profitability: The Swedish Pulp and Paper Industry," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 12(3), pages 345-356, October.
    • Handle: RePEc:kap:enreec:v:12:y:1998:i:3:p:345-356
    DOI: 10.1023/A:1008285813997
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    1. repec:bla:scandj:v:94:y:1992:i:4:p:599-608 is not listed on IDEAS
    2. Runar Brännlund & Rolf Färe & Shawna Grosskopf, 1995. "Environmental regulation and profitability: An application to Swedish pulp and paper mills," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 6(1), pages 23-36, July.
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    Keywords

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    JEL classification:

    • P - Political Economy and Comparative Economic Systems
    • Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics
    • Z - Other Special Topics

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