Title

Alternative intertemporal permit trading regimes with stochastic abatement costs

Campus Units

Economics, Center for Agricultural and Rural Development

Document Type

Article

Publication Version

Submitted Manuscript

Publication Date

1-2006

Journal or Book Title

Resource and Energy Economics

Volume

28

Issue

1

First Page or Article ID Number

24

Last Page

40

DOI

10.1016/j.reseneeco.2005.04.002

Abstract

We examine the social efficiency of alternative intertemporal permit trading regimes. The role of uncertainty and information asymmetry is discussed. For banking to be welfare improving, uncertainty itself does not matter, while information asymmetry does. Three effects of banking are identified: externality effect, information effect, and total permit effect. In the absence of total permit effect, banking is welfare improving if information effect is positive and dominates the externality effect. The relative efficiency of banking regimes with different intertemporal trading ratios is affected by the slope of the benefit and damage functions and the covariance of the shocks.

JEL Classification

Q2, Q28

Comments

This is a working paper of an article published as Feng, Hongli, and Jinhua Zhao. "Alternative intertemporal permit trading regimes with stochastic abatement costs." Resource and Energy Economics 28, no. 1 (2006): 24-40. doi:10.1016/j.reseneeco.2005.04.002. Posted with permission.

Copyright Owner

Elsevier B.V.

Language

en

File Format

application/pdf

Published Version

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