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Environmental policy and speculation on markets for emission permits

Paolo Colla (), Germain Marc and Vincent van Steenberghe
Additional contact information
Germain Marc: UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics

No 2005049, Discussion Papers (ECON - Département des Sciences Economiques) from Université catholique de Louvain, Département des Sciences Economiques

Abstract: Tradable emission permits share many characteristics with financial assets. As on financial markets, speculators are likely to be active on large markets for emission permits such as those developing under the Kyoto Protocol. We show how the presence of speculators on a market for emission permits affects the price of these permits when firms face risk aversion. The agency in charge of the optimal environmental policy should account for the presence of speculators when determining the total amount of permits to issue.

Pages: 23
Date: 2005-10-01
New Economics Papers: this item is included in nep-ene, nep-env, nep-fmk and nep-res
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Environmental Policy and Speculation on Markets for Emission Permits (2012) Downloads
Working Paper: Environmental policy and speculation on markets for emission permits (2005) Downloads
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