Economics at your fingertips  

Regulating greenhouse gas emissions by an inter‐temporal policy mix: an experimental investigation

Tiho Ancev, Rimvydas Baltaduonis and Elizabeth Immer‐Bernold

Australian Journal of Agricultural and Resource Economics, 2021, vol. 65, issue 3, 512-538

Abstract: Emissions taxes impose a fixed price on emissions, whereas under tradable permit schemes prices emerge in the secondary permit market. The delayed price discovery under tradable permits creates uncertainty about the future cost of compliance that liable emitters face. To mitigate this uncertainty, some jurisdictions have designed policies to regulate GHG with an emissions tax that is in force for several years, subsequently transforming into a tradable permit scheme. This paper examines the effects that this staged transition – from no regulation to a regulation by a tax, to a regulation by tradable permits – has on abatement investment, quantity of emissions, permit prices and overall regulation efficiency. The effects of the inter‐temporal mix of policy instruments are compared to the effects of single policy instrument: a tax‐only, and a tradable permit‐only regulation. Our investigation relied on laboratory economics methods to test economic behaviour under these three policy regimes. We find that a staged transition from a tax to a tradable permit scheme results in more socially desirable outcomes on a range of criteria when compared to a regulation based solely on tradable permits, and specifically, it improves ability to make better abatement investment decisions.

Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)

Related works:
Working Paper: Regulating greenhouse gas emissions by an intertemporal policy mix: An experimental investigation (2015) Downloads
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:

Ordering information: This journal article can be ordered from
http://ordering.onli ... 1111/(ISSN)1467-8489

Access Statistics for this article

Australian Journal of Agricultural and Resource Economics is currently edited by John Rolfe, Lin Crase and John Tisdell

More articles in Australian Journal of Agricultural and Resource Economics from Australian Agricultural and Resource Economics Society Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().

Page updated 2021-12-14
Handle: RePEc:bla:ajarec:v:65:y:2021:i:3:p:512-538