Publication:
Industry compensation under recolation risk: a firm-level analysis of the EU emissions trading scheme

Loading...
Thumbnail Image
Identifiers
Publication date
2014-08
Defense date
Advisors
Tutors
Journal Title
Journal ISSN
Volume Title
Publisher
American Economic Association
Impact
Google Scholar
Export
Research Projects
Organizational Units
Journal Issue
Abstract
When regulated firms are offered compensation to prevent them from relocating, efficiency requires that payments be distributed across firms so as to equalize marginal relocation probabilities, weighted by the damage caused by relocation. We formalize this fundamental economic logic and apply it to analyzing compensation rules proposed under the EU Emissions Trading Scheme, where emission permits are allocated free of charge to carbon intensive and trade exposed industries. We show that this practice results in substantial overcompensation for given carbon leakage risk. Efficient permit allocation reduces the aggregate risk of job loss by more than half without increasing aggregate compensation
Description
Keywords
Industry compensation, Industrial relocation, Emissions trading, Permit allocation, EU ETS, Firm data
Bibliographic citation
Martin, R., de Preux, L.B., y Wagner, U.J., "Industry Compensation Under Relocation Risk: A Firm-level Analysis of the EU Emissions Trading Scheme", American Economic Review, 2014, v. 104, n. 8, pp. 2482-2508