On the Design of Optimal Grandfathering Schemes for Emission Allowances


Lange, Andreas ; Böhringer, Christoph


[img]
Preview
PDF
ZEW79.pdf - Published

Download (269kB)

URL: http://ub-madoc.bib.uni-mannheim.de/189
URN: urn:nbn:de:bsz:180-madoc-1893
Document Type: Working paper
Year of publication: 2003
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: Q28 ,
Subject headings (SWD): Umweltzertifikathandel
Abstract: To meet its commitment under the Kyoto Protocol, the EU plans to implement an emissions trading system whith grandfathering of allowances. Besides having distributional impacts, the choice of the grandfathering scheme may affect efficiency if firms anticipate how future allocations depend on upcoming decisions. In this paper, we determine central design rules for optimal grandfathering within a simple two-period model. We find that for (small) open trading systems, where allowance prices are exogenous, first-best second-period grandfathering schemes must not depend on firm-specific decisions in the first period. Second-best schemes correspond to a Ramsey rule of optimal tax differentiation and are generally based on both previous emissions and output. However, ofr closed emissions trading systems, i.e. endogeneous allowance prices, firstand second-best rules coincide and must not depend on previous output levels. They consist of an assignment proportional to the emissions in the first period plus a term which does not depend on firm-specific decisions in either of the two periods.
Additional information:

Das Dokument wird vom Publikationsserver der Universitätsbibliothek Mannheim bereitgestellt.




+ Citation Example and Export

Lange, Andreas ; Böhringer, Christoph (2003) On the Design of Optimal Grandfathering Schemes for Emission Allowances. Open Access [Working paper]
[img]
Preview


+ Search Authors in

+ Download Statistics

Downloads per month over past year

View more statistics



You have found an error? Please let us know about your desired correction here: E-Mail


Actions (login required)

Show item Show item