EconPapers    
Economics at your fingertips  
 

Free allocation of emission permits to reduce carbon leakage: an evolutionary approach

Angelo Antoci, Simone Borghesi (), Gianluca Iannucci () and Mauro Sodini

Chapter 6 in Handbook on Trade Policy and Climate Change, 2022, pp 76-93 from Edward Elgar Publishing

Abstract: The risk of firms' delocalization due to carbon pricing and the possible measures to avoid it are the object of a long debate and much controversy in the academic and policy fora. To examine this issue, this chapter examines the possible relocating effects provoked by the implementation of an Emission Trading System (ETS) adopting an evolutionary framework which allows to capture the possible spread of imitative behaviors across ETS-regulated firms. We set up a "toy model" that can illustrate the relationship between the level of free allocations granted by the ETS regulator, the price floor level and the dynamics of the system. Using numerical simulations, we show that changes in some key policy parameters may have non-linear effects on the number of firms that decide to relocate and on the abatement efforts of firms that decide to remain. In particular, we find that there exists an optimal level of allowances that can be given for free which maximizes the abatement effort of regulated firms.

Keywords: Business and Management; Economics and Finance; Environment; Politics and Public Policy (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://www.elgaronline.com/view/edcoll/9781839103230/9781839103230.00014.xml (application/pdf)

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:elg:eechap:19575_6

Ordering information: This item can be ordered from
http://www.e-elgar.com

Access Statistics for this chapter

More chapters in Chapters from Edward Elgar Publishing
Bibliographic data for series maintained by Darrel McCalla ().

 
Page updated 2023-01-10
Handle: RePEc:elg:eechap:19575_6