Dynamic Incentives and Permit Market Equilibrium in Cap-and-Trade Regulation

• 成果类型: Article
• 署名作者: Toyama, Yuta
• 署名单位: Waseda University
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MICROECONOMICS
• ISSN/ISSBN: 1945-7669
• DOI: 10.1257/mic.20190377
• 发表日期: 2024
• 页码: 374-423
• 关键词: environmental-regulation; transaction costs; emissions; banking; POLICY; MODEL; fluctuations; uncertainty; COMPETITION; industry

摘要

This paper develops and estimates a dynamic structural model of emissions abatement, , investment, , and permit trading with banking under cap-and-trade regulation. The model accounts for forward-looking behavior and transaction costs in the permit market, , which determine the temporal and geographical distribution of emissions in equilibrium and, , thus, , the welfare implications of the regulation. The model is applied to the US Acid Rain Program to evaluate the role of regulatory designs. Permit banking mitigates inefficiencies arising from transaction costs and modifies the timing of emissions. An emissions tax policy could achieve an outcome close to dynamic cap and trade without transaction costs. ( JEL D23, H23, L94, L98, Q52, Q53, Q58) )