On the Design of Optimal Grandfathering Schemes for Emission Allowances

  title={On the Design of Optimal Grandfathering Schemes for Emission Allowances},
  author={C. B{\"o}hringer and Andreas Lange},
  journal={Environmental Economics},
  • C. Böhringer, Andreas Lange
  • Published 2003
  • Economics
  • Environmental Economics
  • To meet its commitment under the Kyoto Protocol, the EU plans to implement an emissions trading system with grandfathering of allowances. Besides having distributional impacts, the choice of the grandfathering scheme may affect efficiency if firms anticipate how future allocations depend on upcoming decisions. In this paper, we determine central design rules for optimal grandfathering within a simple two-period model. We find that for (small) open trading systems, where allowance prices are… CONTINUE READING
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