Irreversible Abatement Investment Under Cost Uncertainties: Tradable Emission Permits and Emissions Charges

dc.contributor.author Zhao, Jinhua
dc.contributor.department Center for Agricultural and Rural Development
dc.date 2018-02-16T12:57:50.000
dc.date.accessioned 2020-06-30T01:03:34Z
dc.date.available 2020-06-30T01:03:34Z
dc.date.embargo 2015-06-14
dc.date.issued 2000-08-01
dc.description.abstract <p>A major concern with tradable emission permits (TEPs) is that stochastic permit prices may reduce firm incentive to invest in abatement capital or technologies relative to other policies such as a fixed emissions charge. However, under efficient permit trading, the price uncertainty is caused by abatement cost uncertainties which affect investment under both permit and charge policies. The authors develop a rational expectations general equilibrium model of permit trading to show how cost uncertainty affects investment. Differences between the two policies can be decomposed into a general equilibrium effect and a price-versus-quantity effect. Except for the curvature of the payoff functions, uncertainties reduce both effects so that tradable permits in fact help maintain firms' investment incentive under uncertainty.</p>
dc.identifier archive/lib.dr.iastate.edu/card_workingpapers/276/
dc.identifier.articleid 1273
dc.identifier.contextkey 7213904
dc.identifier.s3bucket isulib-bepress-aws-west
dc.identifier.submissionpath card_workingpapers/276
dc.identifier.uri https://dr.lib.iastate.edu/handle/20.500.12876/12605
dc.source.bitstream archive/lib.dr.iastate.edu/card_workingpapers/276/00wp252.pdf|||Fri Jan 14 23:07:33 UTC 2022
dc.subject.disciplines Agricultural and Resource Economics
dc.subject.disciplines Agricultural Economics
dc.subject.disciplines Economics
dc.subject.disciplines Environmental Health and Protection
dc.subject.disciplines Environmental Policy
dc.subject.disciplines Natural Resource Economics
dc.title Irreversible Abatement Investment Under Cost Uncertainties: Tradable Emission Permits and Emissions Charges
dc.type article
dc.type.genre article
dspace.entity.type Publication
relation.isOrgUnitOfPublication 1a6be5f1-4f64-4e48-bb66-03bbcc25c76d
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