Emissions Trading: ERCs or Allowances
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.
|Date of creation:||11 Jul 2000|
|Contact details of provider:|| Postal: 150 St. George Street, Toronto, Ontario|
Phone: (416) 978-5283
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.:
- M. L. Weitzman, 1973.
"Prices vs. Quantities,"
106, Massachusetts Institute of Technology (MIT), Department of Economics.
- 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.
- Baumol,William J. & Oates,Wallace E., 1988.
"The Theory of Environmental Policy,"
Cambridge University Press, number 9780521322249, May.
- 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 WP-96-12, Federal Reserve Bank of Chicago.
- Helfand, Gloria E, 1991. "Standards versus Standards: The Effects of Different Pollution Restrictions," American Economic Review, American Economic Association, vol. 81(3), pages 622-634, June.
- Raymond S. Hartman & Kirkor Bozdogan & Ravindra M. Nadkarni, 1979. "The Economic Impacts of Environmental Regulations on the U.S. Copper Industry," Bell Journal of Economics, The RAND Corporation, vol. 10(2), pages 589-618, Autumn.
- Montgomery, W. David, 1972. "Markets in licenses and efficient pollution control programs," Journal of Economic Theory, Elsevier, vol. 5(3), pages 395-418, December.
- Joskow, Paul L & Schmalensee, Richard & Bailey, Elizabeth M, 1998. "The Market for Sulfur Dioxide Emissions," American Economic Review, American Economic Association, vol. 88(4), pages 669-685, September.
- Thomas Klier & Richard Mattoon & Michael Prager, 1997. "A Mixed Bag: Assessmentof Market Performance and Firm Trading Behaviour in the NOx Reclaim Programme," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 40(6), pages 751-774.
- Thomas, Vinod, 1980. "Welfare cost of pollution control," Journal of Environmental Economics and Management, Elsevier, vol. 7(2), pages 90-102, June.
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.