An Advantage of Emission Intensity Regulation for Emission Cap Regulation in a Near-Zero Emission Industry

Hirose, Kosuke and Matsumura, Toshihiro (2018): An Advantage of Emission Intensity Regulation for Emission Cap Regulation in a Near-Zero Emission Industry.

Abstract

We revisit command-and-control regulations and compare their efficiencies, in particular, an emission cap regulation that restricts total emissions and an emission intensity regulation that restricts emissions per unit of output under emission equivalence. We find that in both the most stringent target case, when the target emission level is close to zero, and the weakest target case, when the target emission level is close to business as usual, emission intensity yields greater welfare, although the same may not be true in moderate target cases.

• Item Type: MPRA Paper
• Language: English
• Keywords: near-zero emission industry; emission cap; emission intensity; emission equivalence
• Subjects: L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets; L - Industrial Organization > L5 - Regulation and Industrial Policy > L51 - Economics of Regulation; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q52 - Pollution Control Adoption and Costs ; Distributional Effects ; Employment Effects

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