Author (Person) | (et al.), , Martin, Ralf |
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Publisher | European University Institute: Robert Schuman Centre for Advanced Studies |
Series Title | RSCAS Working Papers |
Series Details | No.37, July 2012 |
Publication Date | 2012 |
ISSN | 1028-3625 |
Content Type | Journal | Series | Blog |
Abstract: When industry compensation is offered to prevent relocation of regulated firms, efficiency requires that payments be distributed across firms so as to equalize marginal relocation probabilities, weighted by the damage caused by elocation. We formalize this fundamental economic logic and apply it to analyze industry compensation rules proposed under the EU Emissions Trading Scheme, which allocate permits for free to carbon and trade intensive industries. We estimate that this practice will result in overcompensation in the order of €6.7 billion every year. Efficient allocation would reduce the aggregate risk of job loss by two thirds without increasing aggregate compensation. |
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Source Link | http://hdl.handle.net/1814/23355 |
Subject Categories | Environment |
Countries / Regions | Europe |
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