Cap-and-Trade Properties under Different Scheme Designs
This paper examines the key design mechanisms of existing and proposed cap-and-trade markets. First, it is shown that the hybrid systems under investigation (safety-valve with offsets, price floor using a subsidy, price collar, allowance reserve, and options offered by the regulator) can be decompos...
| Principais autores: | , |
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| Formato: | Working Paper |
| Idioma: | en_US |
| Publicado em: |
MIT Center for Energy and Environmental Policy Research
2010
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| Acesso em linha: | http://hdl.handle.net/1721.1/51718 |
| Resumo: | This paper examines the key design mechanisms of existing and proposed cap-and-trade markets. First, it is shown that the hybrid systems under investigation (safety-valve with offsets, price floor using a subsidy, price collar, allowance reserve, and options offered by the regulator) can be decomposed into a combination of an ordinary cap-and-trade scheme with European- or American-style call and put options. Then, we quantify and discuss the advantages and disadvantages of the proposed hybrid schemes by investigating whether pre-set objectives (enforcement of permit price bounds and reduction of potential costs for relevant companies) can be accomplished while maintaining the original environmental targets. |
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