Industry compensation under relocation risk: a firm-level analysis of the EU Emissions Trading Scheme

Ralf Martin, Mirabelle Mu�ls, Laure de Preux and Ulrich Wagner
Authors registered in the RePEc Author Service: Mirabelle Muûls ()

No 85, GRI Working Papers from Grantham Research Institute on Climate Change and the Environment

Abstract: When industry compensation is offered to prevent relocation of regulated firms, efficiency requires that payments be distributed across firms so as to equalize marginal relocation probabilities, weighted by the damage caused by relocation. We formalize this fundamental economic logic and apply it to analyze industry compensation rules proposed under the EU Emissions Trading Scheme, which allocate permits for free to carbon and trade intensive industries. We estimate that this practice will result in overcompensation in the order of �6.7 billion every year. Efficient allocation would reduce the aggregate risk of job loss by two thirds without increasing aggregate compensation.

Date: 2012-06
New Economics Papers: this item is included in nep-ene, nep-env and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
http://www.lse.ac.uk/GranthamInstitute/wp-content/ ... s-Trading-Scheme.pdf (application/pdf)

Related works:
Journal Article: Industry Compensation under Relocation Risk: A Firm-Level Analysis of the EU Emissions Trading Scheme (2014)
Working Paper: Industry compensation under relocation risk: a firm-level analysis of the EU emissions trading scheme (2014)
Working Paper: Industry Compensation Under Relocation Risk: A Firm-Level Analysis of the EU Emissions Trading Scheme (2013)
Working Paper: Industry Compensation Under Relocation Risk: A Firm-Level Analysis of the EU Emissions Trading Scheme (2012)
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:lsg:lsgwps:wp85

Access Statistics for this paper

More papers in GRI Working Papers from Grantham Research Institute on Climate Change and the Environment Contact information at EDIRC.
Bibliographic data for series maintained by The GRI Administration ().