IRREVERSIBLE ABATEMENT INVESTMENT UNDER COST UNCERTAINTIES: TRADABLE EMISSION PERMITS AND EMISSIONS CHARGES
Jinhua Zhao ()
No 21816, 2000 Annual meeting, July 30-August 2, Tampa, FL from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)
A major concern with TEPs is that stochastic permit prices may discourage abatement investment relative to other policies such as a fixed emissions charge. However, the price uncertainty is fundamentally caused by abatement cost uncertainties, which affect investment under both policies. We develop a rational expectations general equilibrium model of permit trading to show how uncertainty reduces investment. Differences between the two policies can be decomposed into a general equilibrium effect and a price-vs-quantity effect. Except for the curvature of the payoff functions, uncertainties reduce both effects: tradable permits in fact helps maintain firms' investment incentives under uncertainty.
Keywords: Environmental; Economics; and; Policy (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
Journal Article: Irreversible abatement investment under cost uncertainties: tradable emission permits and emissions charges (2003)
Working Paper: Irreversible Abatement Investment Under Cost Uncertainties: Tradable Emission Permits and Emissions Charges (2003)
Working Paper: Irreversible Abatement Investment Under Cost Uncertainties: Tradable Emission Permits and Emissions Charges (2000)
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:ags:aaea00:21816
Access Statistics for this paper
More papers in 2000 Annual meeting, July 30-August 2, Tampa, FL from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().