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Emissions Trading with Profit-Neutral Permit Allocations.

Abstract:

This paper examines the operation of an emissions trading scheme (ETS) in a Cournot oligopoly. We study the impact of the ETS on industry output, price, costs, emissions, and profits. In particular, we develop formulae for the number of emissions permits that have to be freely allocated to firms in order to neutralize any adverse impact the ETS may have on profits. These formulae tell us that the profit impact of the ETS is usually limited. Indeed, under quite general conditions, industry pro...

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Volume:
12
Series:
Economics Working Papers
Publication date:
2008-01-01
URN:
uuid:e8c6cb6d-e3c6-4718-8034-248a3b2e8706
Local pid:
oai:economics.ouls.ox.ac.uk:12592
Language:
English

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