@inproceedings{Schmidt2010Carbon,
abstract = {Emission allowances are often distributed for free in an early phase of a cap-and-trade scheme (grandfathering) to reduce adverse effects on the profitability of firms. If the grandfathering scheme is phased out over time, firms may nevertheless relocate to countries with a lower carbon price once the competitive disadvantage of their home industry becomes sufficiently high. We show that this is not necessarily the case. A temporary grandfathering policy can be a sufficient instrument to avert relocation in the long run, even if immediate relocation would be profitable in the absence of grandfathering. A necessary condition for this is that the permit price triggers investments in low-carbon technologies or abatement capital.},
address = {Frankfurt a. M.},
author = {Robert Christian Schmidt},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {Q55; Q58; L51; 330; climate policy; emissions trading; grandfathering; leakage; cap-and-trade},
language = {eng},
number = {F18-V2},
publisher = {Verein f\"{u}r Socialpolitik},
series = {Beitr\"{a}ge zur Jahrestagung des Vereins f\"{u}r Socialpolitik 2010: \"{O}konomie der Familie - Session: Environmental Policy: Incentives and Instruments},
title = {Carbon leakage: Grandfathering as an incentive device to avert relocation},
url = {http://hdl.handle.net/10419/37457},
year = {2010}
}
