Combining price and quantity controls under partitioned environmental regulation

• 成果类型: Article
• 署名作者: Abrell, Jan; Rausch, Sebastian
• 署名单位: Swiss Federal Institutes of Technology Domain; ETH Zurich; Massachusetts Institute of Technology (MIT)
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2016.11.018
• 发表日期: 2017
• 页码: 226-242
• 关键词: Emission trading; Hybrid regulation; Partitioned environmental regulation; Technology uncertainty; Emission uncertainty; EU EFS

摘要

This paper analyzes hybrid emissions trading systems (ETSs)under partitioned environmental regulation when firms' abatement costs and future emissions are uncertain. We show that hybrid policies that introduce bounds on the price or the quantity of abatement provide a way to hedge against differences in marginal abatement costs across partitions. Price bounds are more efficient than abatement bounds as they also use information on firms' abatement technologies while abatement bounds can only address emission uncertainty. Using a numerical stochastic optimization model with equilibrium constraints for the European carbon market, we find that introducing hybrid policies in EU ETS reduces expected excess abatement costs of achieving targeted emission reductions under EU climate policy by up to 89%. We also find that under partitioned regulation there is a high likelihood for hybrid policies to yield sizeable ex-post cost reductions. (C) 2016 Elsevier B.V. All rights reserved.