Joint Design of Emission Tax and Trading Systems

Bernard Caillaud () and Gabrielle Demange

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Abstract: This paper analyzes the joint design of fiscal and cap-and-trade instruments in climate policies under uncertainty. Whether the optimal mechanism is a mixed policy (with some firms subject to a tax and others to a cap-and-trade) or a uniform one (with all firms subject to the same instrument) depends on parameters reecting preferences, production, and, most importantly, the stochastic structure of the shocks affecting the economy. This framework is then used to address the issue of the non-cooperative design of climate regulation systems in various areas worldwide under uncertainty. We characterize the resulting ineficiency, we show how the Pareto argument in favor of merging ETS of different regions is reinforced under uncertainty, and we discuss the non-cooperative design of mixed systems.

Keywords: climate policies; cap-and-trade mechanisms; emission tax; uncertainty (search for similar items in EconPapers)
Date: 2016-07
New Economics Papers: this item is included in nep-ene and nep-pbe
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01112185v2
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Joint Design of Emission Tax and Trading Systems (2017)
Working Paper: Joint design of emission tax and trading systems (2017)
Working Paper: Joint design of emission tax and trading systems (2017)
Working Paper: Joint Design of Emission Tax and Trading Systems (2016)
Working Paper: Joint Design of Emission Tax and Trading Systems (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:psewpa:halshs-01112185

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