Irreversible Abatement Investment Under Cost Uncertainties: Tradable Emission Permits and Emissions Charges
| dc.creator | Zhao, Jinhua | |
| dc.date | 2017-04-01T19:57:21Z | |
| dc.date.accessioned | 2026-07-09T03:23:58Z | |
| dc.description | A major concern with 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 effcient permit trading, the price uncertainty is caused by abatement cost uncertainties which affect investment under both permit and charge policies. We 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-vs-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. | |
| dc.identifier | doi:10.22004/ag.econ.18342 | |
| dc.identifier | https://ageconsearch.umn.edu/record/18342/files/wp000252.pdf | |
| dc.identifier | http://ageconsearch.umn.edu/record/18342 | |
| dc.identifier.uri | http://hdl.handle.net/123456789/531875 | |
| dc.language | eng | |
| dc.publisher | ||
| dc.source | http://ageconsearch.umn.edu/record/18342 | |
| dc.title | Irreversible Abatement Investment Under Cost Uncertainties: Tradable Emission Permits and Emissions Charges | |
| dc.type | Text |