The invisible hand or the invisible handshake: Uncertainty and the optimal carbon pollution reduction regime

Global Climate ChangeJohn Foster has asked that I post a link to a paper he’s recently co-authored (pdf) arguing for a different carbon regulatory regime to promote carbon abatement. I’m travelling and unable to subject the paper to any analysis, but it looks interesting. I hope you’ll check it out. The abstract is as follows:

Whilst emissions trading systems are widely held to be able to deliver lowest-cost
abatement, uncertainty reduces their effectiveness. We consider a new scheme,
the Tender-Price Allocation Mechanism, which focuses carbon factor cost
expenditure on abatement rather than just revenue transfers. It is a scheme that
reduces uncertainty and the costs of uncertainty for both firms and regulators.
It also incorporates a suite of incentives that compensates for the externalities
associated with abatement investment.

This entry was posted in Climate Change, Economics and public policy. Bookmark the permalink.
Notify of
Inline Feedbacks
View all comments