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  Reduced Allowability and the Allocation of Emission Abatement

Aresin, S. (2015). Reduced Allowability and the Allocation of Emission Abatement. Working Paper of the Max Planck Institute for Tax Law and Public Finance, No. 2015-12.

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http://ssrn.com/abstract=2691957 (Preprint)
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 Creators:
Aresin, Sabine1, Author           
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1Public Economics, MPI for Tax Law and Public Finance, Max Planck Society, ou_830552              

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Free keywords: Clean Development Mechanism, Import restrictions, Allowability, Green House Gas offset, Abatement
 Abstract: Introducing discounts on Certified Emission Reductions from the Clean Development Mechanism is often treated as if it only imposed a substitution effect on a firm’s decision between domestic and abroad abatement. Applying a cost minimization approach with a representative firm, I can show that reduced allowability generates a quantity effect in addition to the substitution effect. This quantity effect counteracts the substitution effect for abroad abatement. It may even cause abroad abatement to increase as a result of reduced allowability for Certified Emission Reductions. The results are robust to introducing a secondary market for emission credits, given endogenous prices.

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Language(s): eng - English
 Dates: 2015-11-04
 Publication Status: Published online
 Pages: 25
 Publishing info: München : Max Planck Institute for Tax Law and Public Finance
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Title: Working Paper of the Max Planck Institute for Tax Law and Public Finance
Source Genre: Series
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Pages: - Volume / Issue: No. 2015-12 Sequence Number: - Start / End Page: - Identifier: -