Optimal design of a phase-in emissions trading program with voluntary compliance options
In this paper we explore the welfare implications of voluntary compliance within an emissions trading program and derive optimal permits allocations to affected and opti-in sources when the environmental regulator has incomplete information on individual unrestricted emissions and control costs. The...
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| Format: | Working Paper |
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MIT Center for Energy and Environmental Policy Research
2009
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| Online Access: | http://hdl.handle.net/1721.1/45073 |
| _version_ | 1826210882756018176 |
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| author | Montero, Juan Pablo |
| author2 | Massachusetts Institute of Technology. Center for Energy and Environmental Policy Research. |
| author_facet | Massachusetts Institute of Technology. Center for Energy and Environmental Policy Research. Montero, Juan Pablo |
| author_sort | Montero, Juan Pablo |
| collection | MIT |
| description | In this paper we explore the welfare implications of voluntary compliance within an emissions trading program and derive optimal permits allocations to affected and opti-in sources when the environmental regulator has incomplete information on individual unrestricted emissions and control costs. The regulator faces a trade-off between production efficiency (minimization of control costs) and information rent extraction (reduction of excess permits allocated to opt-in sources). The first-best equilibrium can be attained if the regulator can freely allocate permits to affected and opt-in sources; otherwise a second-best equilibrium is implemented. The latter is sensitive to uncertainty in control costs and benefits |
| first_indexed | 2024-09-23T14:56:58Z |
| format | Working Paper |
| id | mit-1721.1/45073 |
| institution | Massachusetts Institute of Technology |
| last_indexed | 2024-09-23T14:56:58Z |
| publishDate | 2009 |
| publisher | MIT Center for Energy and Environmental Policy Research |
| record_format | dspace |
| spelling | mit-1721.1/450732019-04-10T14:52:23Z Optimal design of a phase-in emissions trading program with voluntary compliance options Montero, Juan Pablo Massachusetts Institute of Technology. Center for Energy and Environmental Policy Research. In this paper we explore the welfare implications of voluntary compliance within an emissions trading program and derive optimal permits allocations to affected and opti-in sources when the environmental regulator has incomplete information on individual unrestricted emissions and control costs. The regulator faces a trade-off between production efficiency (minimization of control costs) and information rent extraction (reduction of excess permits allocated to opt-in sources). The first-best equilibrium can be attained if the regulator can freely allocate permits to affected and opt-in sources; otherwise a second-best equilibrium is implemented. The latter is sensitive to uncertainty in control costs and benefits Supported by the National Oceanic and Atmospheric Administration through an award the the MIT Center for Energy and Environmental Policy Research. 2009-04-03T17:07:55Z 2009-04-03T17:07:55Z 1997. Working Paper 97004 http://hdl.handle.net/1721.1/45073 37377778 MIT-CEEPR (Series) ; 97-004WP. 24 p application/pdf MIT Center for Energy and Environmental Policy Research |
| spellingShingle | Montero, Juan Pablo Optimal design of a phase-in emissions trading program with voluntary compliance options |
| title | Optimal design of a phase-in emissions trading program with voluntary compliance options |
| title_full | Optimal design of a phase-in emissions trading program with voluntary compliance options |
| title_fullStr | Optimal design of a phase-in emissions trading program with voluntary compliance options |
| title_full_unstemmed | Optimal design of a phase-in emissions trading program with voluntary compliance options |
| title_short | Optimal design of a phase-in emissions trading program with voluntary compliance options |
| title_sort | optimal design of a phase in emissions trading program with voluntary compliance options |
| url | http://hdl.handle.net/1721.1/45073 |
| work_keys_str_mv | AT monterojuanpablo optimaldesignofaphaseinemissionstradingprogramwithvoluntarycomplianceoptions |