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Price Floors for Emissions Trading

Author

Listed:
  • Peter John Wood

    (The Australian National University)

  • Frank Jotzo

    (The Australian National University)

Abstract

Price floors in greenhouse gas emissions trading schemes can have advantages for technological innovation, price volatility, and management of cost uncertainty, but implementation has potential pitfalls. We argue that the best mechanism for implementing a price floor is to have firms pay an extra fee or tax. This has budgetary advantages and is more compatible with international permit trading than alternative approaches that dominate the academic and policy debate. The fee approach can also be used to implement more general hybrid approaches to emissions pricing.

Suggested Citation

  • Peter John Wood & Frank Jotzo, 2009. "Price Floors for Emissions Trading," Working Papers 2009.118, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2009.118
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    References listed on IDEAS

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    More about this item

    Keywords

    Price Floor; Price Ceiling; Carbon Tax; Emissions Trading; Carbon Pricing; Price and Quantity Controls; Waxman-Markey Bill;
    All these keywords.

    JEL classification:

    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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