 An optimal hybrid emission control system in a multiple compliance period modelJongmin Yu and Mindy Mallory () Resource and Energy Economics, 2015, vol. 39, issue C, 16-28 Abstract: We characterize an optimal hybrid policy for pollutant emissions that includes a permit price ceiling and emission cap in a multi-period model. Previous studies have primarily focused on a hybrid policy of emission regulation that included an emission cap and permit price ceiling in a single period model, we extend this literature by developing such an optimal hybrid model in a multi-period framework where banking and borrowing of emission permits is allowed. In our model, we compare the case of a regulator who sets the emission cap and price ceiling to be consistent with a long run emission objective with the case of a regulator who occasionally is motivated to deviate from the optimal long run regulatory policy in order to correct for unexpected but exceptionally high emissions. Using a discrete dynamic programming model with stochastic emissions, we show that the hybrid model gives the regulator a degree of freedom in making an optimal price and quantity choice. Keywords: Cap and trade; Climate change; Emissions tax; Hybrid emission control; Safety valve (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:resene:v:39:y:2015:i:c:p:16-28 DOI: 10.1016/j.reseneeco.2014.11.003 Access Statistics for this article Resource and Energy Economics is currently edited by J. F. Shogren and S. Smulders More articles in Resource and Energy Economics from Elsevier |
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