Emissions trading, non-compliance and bankable permits

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http://hdl.handle.net/10138/298116

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Lappi , P 2017 , ' Emissions trading, non-compliance and bankable permits ' , International Tax and Public Finance , vol. 24 , no. 6 , pp. 1081-1099 . https://doi.org/10.1007/s10797-017-9439-2

Title: Emissions trading, non-compliance and bankable permits
Author: Lappi, Pauli
Contributor: University of Helsinki, Department of Economics and Management
Date: 2017-12
Language: eng
Number of pages: 19
Belongs to series: International Tax and Public Finance
ISSN: 0927-5940
URI: http://hdl.handle.net/10138/298116
Abstract: We study non-compliance in an emissions trading system in which firms may bank and borrow permits. We find a condition involving auditing probability that characterizes compliance and allows us to analyze the time paths of actual emissions, reported emissions and violations. We find two interesting time instants. At the first time instant, reported emissions begin to be lower than the actual emissions, and at the second time instant, the reported emissions become zero and the actual emissions become constant. The results indicate, among other things, that a given penalty scheme may fail to induce compliance over the whole planning interval, even though it achieves compliance over the initial stage.
Subject: Banking
Compliance
Emissions trading
Enforcement
Monitoring
MARKET POWER
POLLUTION
ENFORCEMENT
BANKING
POLICY
FIRMS
QUANTITIES
PRICES
CHOICE
511 Economics
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