Optimal monitoring of credit-based emissions trading under asymmetric information
Ian MacKenzie () and
Markus Ohndorf ()
Journal of Regulatory Economics, 2012, vol. 42, issue 2, 180-203
Project-based emissions trading schemes, like the Clean Development Mechanism, are particularly prone to problems of asymmetric information between project parties and the regulator. In this paper, we extend the general framework on incomplete enforcement of policy instruments to reflect the particularities of credit-based mechanisms. The main focus of the analysis is to determine the regulator’s optimal spot-check frequency given plausible assumptions of incomplete enforcement under asymmetric information on reduction costs and heterogeneous verifiability of projects. We find that, depending on the actual abatement cost and penalty schemes, optimal monitoring for credit-based systems is often discontinuous and significantly differs from the one to be applied for cap-and-trade schemes or environmental taxes. We conclude that, in a real-world context, project admission should ultimately be based on the criterion of verifiability. Copyright Springer Science+Business Media, LLC 2012
Keywords: Environmental regulation; Project-based emissions trading systems; Audits and compliance; K32; D42; D82; Q58 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed
Downloads: (external link)
Access to full text is restricted to subscribers.
Working Paper: Optimal monitoring of credit-based emissions trading under asymmetric information (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:kap:regeco:v:42:y:2012:i:2:p:180-203
Ordering information: This journal article can be ordered from
http://www.springer. ... on/journal/11149/PS2
Access Statistics for this article
Journal of Regulatory Economics is currently edited by Michael A. Crew
More articles in Journal of Regulatory Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().