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Title:Transaction costs and tradable permits: Empirical evidence from the EU emissions trading scheme PDF Logo
Authors:Heindl, Peter
Issue Date:2012
Series/Report no.:ZEW Discussion Papers 12-021
Abstract:In this paper, transaction costs in the EU emissions trading scheme (EU ETS) are examined empirically based on survey data from German companies. Transaction costs from measurement, reporting and verification (MRV) of emissions, permit trading and general informational costs are considered. Transaction costs from MRV and permit trading are of non-linear form and dependent on annual emission and trading volumes based on OLS and nonparametric estimation. As a consequence of non-linear transaction costs, welfare losses occur compared to a first-best setup under zero transaction costs. In practice, smaller emitters will emit less (abate more) compared to larger emitters and vice versa due to economies of scale in the management of emissions trading. The results further imply that optimal firm size might be influenced by transaction costs in the EU ETS because of relatively high average transaction costs amongst smaller emitters. Overall annual transaction costs in the EU ETS in Germany are estimated to be EUR 8.7 million.
Subjects:Emissions Trading
Transaction Costs
EU ETS
JEL:Q52
H23
D23
Persistent Identifier of the first edition:urn:nbn:de:bsz:180-madoc-322019
Document Type:Working Paper
Appears in Collections:ZEW Discussion Papers
Publikationen von Forscherinnen und Forschern des ZEW

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