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Pollution Permit System and Firm Dynamics: Does the Allocation Scheme Matter?

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dc.contributor.author Dardati, Evangelina
dc.date.accessioned 2015-03-12T23:50:55Z
dc.date.available 2015-03-12T23:50:55Z
dc.date.issued 2013
dc.identifier.citation Documentos de Investigación 294: 2013, p. 1-45 es_CL
dc.identifier.uri http://repositorio.uahurtado.cl/handle/11242/6642
dc.description.abstract Most cap-and-trade systems allocate permits for free. However, they differ dependent on whether closing plants and new entrants get free permits. I use a dynamic model with heterogeneous firms and equilibrium conditions in the output and emission market to quantify the effect on exit/entry, investment and welfare of different allocation rules. I calibrate the model with data from the power plants participating in the US SO2 program and quantify the effects of two allocation schemes: The US SO2 case, in which closing plants keep their permits and new entrants do not get any of them; The EU-ETS case, in which plants lose permits upon exit and new entrants get allowances. If the US switched to the EU-ETS allocation scheme, the price of output would be 1.5% lower, the price of permits 7.6% higher, and there would be a distribution of dirtier and less productive plants. Consumers are better off if the US switched to the EU-ETS system (lower price), while producers are better off with the US SO2 system (higher profits). es_CL
dc.language.iso en_US es_CL
dc.publisher Universidad Alberto Hurtado. Facultad de Economía y Negocios es_CL
dc.title Pollution Permit System and Firm Dynamics: Does the Allocation Scheme Matter? es_CL
dc.type Artículo es_CL

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