A Note on Speculation, Emissions Trading and Environmental Protection
This paper addresses the role speculation may play in environmental protection under emissions trading. We build a two period model with n firms and a representative speculator, and compare a benchmark case with no speculation with one where speculation takes place under environmental policy uncertainty. We find that, when a stricter environmental policy is expected in the second period, speculation generates both a higher permits price and a better environmental quality in the first period. Further, when a decrease in future policy strictness is expected, an increase in first period environmental quality may follow. Speculation may therefore help accelerate the speed of environmental improvement.
Volume (Year): 99 (2009)
Issue (Month): 2 (April-June)
|Contact details of provider:|| |
When requesting a correction, please mention this item's handle: RePEc:rpo:ripoec:v:99:y:2009:i:2:p:127-144. 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: (Sabrina Marino)
If references are entirely missing, you can add them using this form.