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An experimental analysis of grandfathering vs dynamic auctioning in the EU ETS
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Orientador(es)
Resumo(s)
This study constitutes a first attempt to experimentally test the performance of a 100%
auction versus a 100% free allocation of CO2 permits under the rules and parameters
that mimic the EU ETS (imperfect competition, uncertainty in emissions’ control, and
allowing banking). It also incorporates a first attempt to include in the analysis
measures of the risk preferences of subjects participating in emission permits
experiments. Another distinctive feature of this study is the implementation of a
theoretically appropriate auction format for the primary allocation of emission permits.
Our experimental results indicate that the EU ETS has the potential to reduce CO2
emissions, achieving targets considerably more restrictive than the current ones at high
efficiency levels, both with auctioned and free emission permits. Auctioning, however,
reveals a clear potential to do better than grandfathering the initial allocation of permits.
In addition, the results reveal that concerns about undue scarcity, and corresponding
high prices, in secondary markets generated by a primary auction market are not
warranted under the proposed dynamic auction format.
Descrição
Palavras-chave
EU ETS Auctioning Grandfathering Banking Ausubel auction
Contexto Educativo
Citação
Editora
Núcleo de Investigação em Microeconomia Aplicada - Universidade do Minho