Emissions trading with profit-neutral permit allocations

• 成果类型: Article
• 署名作者: Hepburn, Cameron J.; Quah, John K. -H.; Ritz, Robert A.
• 署名单位: University of London; London School Economics & Political Science; University of Oxford; University of Cambridge; University of Cambridge
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2012.10.004
• 发表日期: 2013
• 页码: 85-99
• 关键词: Cap-and-trade; Permit allocation; Profit-neutrality; Cost pass-through; abatement; Grandfathering

摘要

This paper examines the impact of an emissions trading scheme (ETS) on equilibrium emissions, output, price, market concentration, and profits in a generalized Cournot model. We develop formulae for the number of emissions permits that have to be freely allocated to firms to neutralize the profit impact of the ETS. We show that its profit impact is usually limited: in a Cournot oligopoly with constant marginal costs, total industry profits are preserved so long as freely allocated permits cover a fraction of initial emissions that does not exceed the industry's Herfindahl index. (C) 2012 Elsevier By. All rights reserved.