The air pollution emission permits market in the EU and moral hazard

Francisco Alvarez Gonzalez () and Ester Camiña
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Ester Camiña: Universidad Complutense Madrid
Authors registered in the RePEc Author Service: Ester Camiña

No 274, Computing in Economics and Finance 2006 from Society for Computational Economics

Abstract: The European Environmental Agency (EEA) assigns periodically air pollution emission rights among the EC member states, who, in turn, share their respective endowment among the polluting firms. There exists a moral hazard problem since the EEA does not observe abatement efforts. We propose a theoretical model to analyze the effects that a market for emission rights has on the abatement efforts that the different firms undertake to reduce pollution. Moreover, we analyze how different environmental policies induce different abatement efforts

Keywords: Moral Hazard; Environmental Economics; Markets (search for similar items in EconPapers)
JEL-codes: D21 D82 (search for similar items in EconPapers)
Date: 2006-07-04
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Persistent link: https://EconPapers.repec.org/RePEc:sce:scecfa:274

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