Optimal Allocation of tradable emission Permits under upstream-downstream Strategic Interaction

Abstract

In this paper we account for the fact that Cournot equilibrium strategies in the sector under environmental regulation depend on …rms'interaction in the permits market (and vice versa). In this context, we show that the cost-e¤ective allocation of permits between …rms must compensate the cost-rising strategies exercised by the stronger …rm (in the output… (More)
DOI: 10.1142/S0219198912400038

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