Emissions trading and profit-neutral grandfathering
This paper examines the amount of grandfathering needed for an emissions trading scheme (ETS) to have a neutral impact on firm profits. We provide a simple formula to calculate profit-neutral grandfathering in a Cournot model with firms of different sizes and a general demand function. Using this fo...
| Main Authors: | , , |
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| 格式: | Working paper |
| 出版: |
University of Oxford
2006
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| _version_ | 1826285192270053376 |
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| author | Hepburn, C Quah, J Ritz, R |
| author_facet | Hepburn, C Quah, J Ritz, R |
| author_sort | Hepburn, C |
| collection | OXFORD |
| description | This paper examines the amount of grandfathering needed for an emissions trading scheme (ETS) to have a neutral impact on firm profits. We provide a simple formula to calculate profit-neutral grandfathering in a Cournot model with firms of different sizes and a general demand function. Using this formula, we obtain estimates of profit-neutral grandfathering for the electricity, cement, newsprint and steel industries. Under the current EU ETS, firms obtain close to full grandfathering; we show that while this may still leave some firms worse off, others have probably benefitted substantially. We find no evidence that any industry as a whole could be worse off with full grandfathering. We also show that the common presumption that a higher rate of cost pass-through lowers profit-neutral grandfathering is unreliable |
| first_indexed | 2024-03-07T01:25:09Z |
| format | Working paper |
| id | oxford-uuid:91b7cb7b-ad8d-4e63-b8ba-36f4c7d10cb4 |
| institution | University of Oxford |
| last_indexed | 2024-03-07T01:25:09Z |
| publishDate | 2006 |
| publisher | University of Oxford |
| record_format | dspace |
| spelling | oxford-uuid:91b7cb7b-ad8d-4e63-b8ba-36f4c7d10cb42022-03-26T23:20:33ZEmissions trading and profit-neutral grandfatheringWorking paperhttp://purl.org/coar/resource_type/c_8042uuid:91b7cb7b-ad8d-4e63-b8ba-36f4c7d10cb4Bulk import via SwordSymplectic ElementsUniversity of Oxford2006Hepburn, CQuah, JRitz, RThis paper examines the amount of grandfathering needed for an emissions trading scheme (ETS) to have a neutral impact on firm profits. We provide a simple formula to calculate profit-neutral grandfathering in a Cournot model with firms of different sizes and a general demand function. Using this formula, we obtain estimates of profit-neutral grandfathering for the electricity, cement, newsprint and steel industries. Under the current EU ETS, firms obtain close to full grandfathering; we show that while this may still leave some firms worse off, others have probably benefitted substantially. We find no evidence that any industry as a whole could be worse off with full grandfathering. We also show that the common presumption that a higher rate of cost pass-through lowers profit-neutral grandfathering is unreliable |
| spellingShingle | Hepburn, C Quah, J Ritz, R Emissions trading and profit-neutral grandfathering |
| title | Emissions trading and profit-neutral grandfathering |
| title_full | Emissions trading and profit-neutral grandfathering |
| title_fullStr | Emissions trading and profit-neutral grandfathering |
| title_full_unstemmed | Emissions trading and profit-neutral grandfathering |
| title_short | Emissions trading and profit-neutral grandfathering |
| title_sort | emissions trading and profit neutral grandfathering |
| work_keys_str_mv | AT hepburnc emissionstradingandprofitneutralgrandfathering AT quahj emissionstradingandprofitneutralgrandfathering AT ritzr emissionstradingandprofitneutralgrandfathering |