Regulation , Allocation , and Leakage in Cap-and-Trade Markets for CO 2

  title={Regulation , Allocation , and Leakage in Cap-and-Trade Markets for CO 2},
  author={James Bushnell and Yihsu Chen},
Among the most contentious elements of the design of cap-and-trade systems for emissions trading is the allocation or assignment of the emissions credits themselves. Policy-makers usually try to satisfy a range of goals through the allocation process, including easing the transition costs for high-emissions firms, reducing leakage to unregulated regions, and mitigating the impact of the regulations on product prices such as electricity. In this paper we develop a detailed representation of the… CONTINUE READING
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