Windfall Profits Under Pollution Permits and Output-Based Allocation

Jean-Philippe Nicolaï () and Jorge Zamorano ()
Additional contact information
Jean-Philippe Nicolaï: ETH Zurich
Jorge Zamorano: Université Paris I Panthéon Sorbonne

Environmental & Resource Economics, 2018, vol. 69, issue 4, No 2, 691 pages

Abstract: Abstract This paper analyzes the implementation of pollution permits. It focuses on the distributional impacts linked with the stringency of output-based allocation when two sectors are covered by the market for permits and the total cap is held constant. A new type of profit increase in sectors that are not exposed to international competition, when energy-intensive trade-exposed (EITE) sectors are granted output-based allocations, is demonstrated theoretically. The paper also illustrates a profit increase in the electricity sector in a possible fourth phase of the European Union Emission Trading Scheme, in which output-based allocation will be granted to EITE sectors, compared with the case in which all permits are auctioned.

Keywords: Tradable permits; Oligopoly markets; Output-based allocation; European Union Emission Trading Scheme (EU ETS) (search for similar items in EconPapers)
JEL-codes: F18 H2 Q5 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://link.springer.com/10.1007/s10640-016-0096-1 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:enreec:v:69:y:2018:i:4:d:10.1007_s10640-016-0096-1

Ordering information: This journal article can be ordered from
http://www.springer. ... al/journal/10640/PS2

DOI: 10.1007/s10640-016-0096-1

Access Statistics for this article

Environmental & Resource Economics is currently edited by Ian J. Bateman

More articles in Environmental & Resource Economics from Springer, European Association of Environmental and Resource Economists Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().