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http://hdl.handle.net/10419/37457
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| Title: | | Carbon leakage: Grandfathering as an incentive device to avert relocation  |
| Authors: | | Schmidt, Robert Christian |
| Issue Date: | | 2010 |
| Series/Report no.: | | Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Environmental Policy: Incentives and Instruments F18-V2 |
| 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. |
| Subjects: | | climate policy emissions trading grandfathering leakage cap-and-trade |
| JEL: | | Q55 Q58 L51 |
| Document Type: | | Conference Paper |
| Appears in Collections: | | Jahrestagung des Vereins für Socialpolitik 2010 (Kiel): Ökonomie der Familie
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