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For any emission trading system (ETS) with quantity-based endogenous supply of allowances, there exists a negative demand shock, e.g. induced by abatement policy, that increases aggregate supply and thus cumulative emissions. We prove this green paradox for a general model and then apply it to...
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or 1.5oC. The safe carbon budget is lower if uncertainty about the transient climate response is high and risk tolerance …
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The economic prescription for climate change is clear: price carbon dioxide (CO2) and other greenhouse gas emissions to internalize climate damages. In practice, a variety of political economy constraints prevent the introduction of a carbon price equal to the full social cost of emissions. This...
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This paper empirically studies how emission pricing affects capital replacement and adoption of embodied environmental technology. A pricing policy encourages firms to accelerate retirement of old capital assets and replace them with newer more efficient assets, but this may crowd out...
Persistent link: https://www.econbiz.de/10013359048
CCfDs and compare it to other carbon pricing regimes. In our model, a regulator can offer CCfDs to risk-averse firms that … decide upon irreversible investments into an emission-free technology in the presence of risk. Risk can originate from the … instrument as it hedges firms’ risk encouraging investments when the firms’ risk aversion would otherwise inhibit this. In …
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