Publication type: Article in scientific journal
Type of review: Peer review (publication)
Title: Combining price and quantity controls under partitioned environmental regulation
Authors: Abrell, Jan
Rausch, Sebastian
DOI: 10.1016/j.jpubeco.2016.11.018
Published in: Journal of Public Economics
Volume(Issue): 2017
Issue: 145
Pages: 226
Pages to: 242
Issue Date: 2016
Publisher / Ed. Institution: Elsevier
ISSN: 0047-2727
Language: English
Subjects: Emission Trading; Emission uncertainty; Hybrid regulation; Partitioned environmental regulation
Subject (DDC): 363: Environmental and security problems
Abstract: 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.
Fulltext version: Published version
License (according to publishing contract): Licence according to publishing contract
Departement: School of Management and Law
Appears in collections:Publikationen School of Management and Law

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