The Welfare Consequences of Mixed Environmental Policy Instruments with Voluntary Provision

Yaran Jin

Journal of Industrial Economics, 2019, vol. 67, issue 3-4, 515-564

Abstract: This article evaluates the welfare consequences of a mixed regulatory framework with a voluntary cap‐and‐trade program and intensity standards using data from the Texas electricity industry. I construct and estimate a structural model of the compliance choices of power generating units to recover their abatement costs. Then I simulate for the counterfactual equilibrium under a mandatory cap‐and‐trade regulation. Results show that the mixed policy framework mainly benefits generating units with small capacity and high abatement costs. However, a mandatory cap‐and‐trade regulation with redistribution policies could bring in substantial Pareto improvement.

Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:bla:jindec:v:67:y:2019:i:3-4:p:515-564

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